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A Post-Holiday Breakup ... of Sorts

By Brian Orelli, PhD - Updated Apr 5, 2017 at 7:51PM

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Abbott and Celera revise their partnership.

With personalized medicine on the horizon, the use of molecular diagnostic tests is sure to rise. It looks like Abbott Labs (NYSE:ABT) and Celera (NASDAQ:CRA) figure they're better off developing those tests on their own rather than continuing to team up; the companies have modified their six-year-old partnership to nix the research and development portion of the agreement.

The press release was light on the details -- no numbers were given on the royalties that will be flying in either direction on sales of the companies' m2000 real-time PCR diagnostic system and Celera's genetic tests -- so it's a little hard to see if there's a clear winner in the revision. What is clear is that the companies wanted more flexibility to develop tests for the m2000 on their own.

Part of the issue may be that Abbott now has an infectious disease instrument after its recent purchase of Ibis from Isis Pharmaceuticals (NASDAQ:ISIS). The increased flexibility gives Abbott the choice of developing new tests on whichever platform it thinks is most suitable instead of having to fight with Celera about where to spend its R&D dollars.

When Celera split from Applera, which was renamed Applied Biosystems earlier this year, I figured it would be Celera that would get snatched up -- probably by Abbott. General Electric's (NYSE:GE) health care segment could also have been a suitor. Instead Abbott went with Ibis and it was Applied Biosystems that got acquired by Invitrogen (now Life Technologies (NASDAQ:LIFE)), probably to the dismay of Roche and Illumina (NASDAQ:ILMN). Those two now have a larger foe to fight in the next-generation sequencer arena.

Celera could still get acquired, but at this point it seems more likely it'll continue the development of genetic tests on its own. Considering the coming boom, I'm not sure that's a bad place to be.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

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