Cerner Corporation (Waltham, MA, USA) and Siemens AG (Munich, Germany) have entered into a definitive agreement for Cerner to acquire Siemens' Health Information Technology (IT) business unit, Siemens Health Services, for USD 1.3 billion in cash. The two companies will have a combined total of USD 4.5 billion annual revenue, as well as USD 650 million in annual research and development funds. As part of the agreement, Cerner and Siemens will form a strategic alliance to bring new solutions to market that combine Cerner's health IT leadership and Siemens' strengths in medical devices and imaging.
In part of Kalorama's (New York, NY, USA) EMR market report earlier this year, Siemens is one of the companies that has moved away from electronic medical records in favor of other systems. The move should help Cerner build its place over its rivals McKesson, Epic, and Allscripts.
This agreement is a strategic alliance of a three-year term combining investments in R&D, knowledgeable resources, and complementary client bases. Each company will contribute up to USD 50 million to fund projects of shared importance, aimed at rapidly achieving the next generation of clinical computing to deliver precision medicine at higher quality and lower costs.
For Siemens, the move is one more indication that Siemens may be backing off some parts of its healthcare portfolio. Earlier in the year, the company sold its microbiology testing unit to rival Beckman Coulter.
Given these companies’ strategies, as outlined in Kalorama’s (New York, NY, USA; www.kalorama.com) market for electronic medical records (EMR) Markets 2014, none of these developments is surprising. Cerner is committed to an open healthcare ecosystem able to send and receive data in a universal manner, strongly believing in the proposal that EMRs are not a one-size-fits-all proposition. Siemens Medical Solutions strategy for growth has been based on finding complementary technology that enables Siemens to offer complete solutions.
Neal Patterson, Cerner chairman, CEO and co-founder, comments, "We believe this is an all-win situation for the clients of both organizations and all of our associates and shareholders. Through more than USD 4 billion of cumulative investments in R&D, Cerner has established a strong market standing and is positioned for continued growth. Siemens' health care IT assets provide additional scale, R&D, an impressive client base, and knowledgeable and experienced associates who will help Cerner achieve our plans for the next decade. In addition, the alliance we're creating will drive the next generation of innovations that embed information from the EMR inside advanced diagnostic and therapeutic technologies, benefitting our shared clients."