Founded in 1997 and based in Pacheco, CA, Biocare Medical (“Biocare”) is an oncology-focused developer of immunohistochemistry (“IHC”) and molecular reagents, as well as the associated instrumentation. With a product portfolio of patented and licensed products, Biocare offers a comprehensive suite of reagents, equipment, and lab services to clinical laboratories, research organizations, and pharmaceutical manufacturers. Serving nearly 2,000 customers worldwide with a catalogue of over 2,000 unique product SKUs, customers rely on Biocare’s product quality and consistency for their research and clinical needs.
Top Down Investment Thesis
Excellere’s investment in Biocare is a result of the firm’s disciplined top down investment strategy, driven by several factors including i) a compelling value proposition to medical and research professionals who can better identify cancer with enhanced specificity, ii) attractive industry growth driven by increasing cancer incidence rates and expanding testing and research needs, iii) IHC’s position as the most widely used platform in histopathology and standard of care for cancer diagnoses, and iv) the buy-and-build opportunity within a highly fragmented industry sector that Excellere pursued for approximately five years and established a list of over 100 acquisition candidates and industry relationships.
The reagents industry is large, global and fast growing with several drivers providing attractive tailwinds. Biocare’s primary end-market is cancer research and detection, one of the most attractive sub-segments within the broader life sciences tools sector. According to LEK, worldwide cancer incidence is expected to grow 2.4% per annum to nearly 17.1 million new cancer diagnoses in 2020. Increases in the total number of new cancer diagnoses are driving an expanding number of U.S. biopsy procedures and ultimately growing consumption of reagents. The worldwide IHC and molecular diagnostics market is expected to grow to $2.4 billion by 2021, reflective of approximately 5% annual growth driven by cancer incidence rate growth, development of new biomarkers, and pricing increase within the currently primary technology for the cancer diagnostic value chain.
Buy and Build Strategy
Consumable life science and diagnostic tools remains a highly fragmented industry with a multitude of organic and acquisition growth opportunities. Since inception, Biocare has remained focused on providing world class immunohistochemistry and molecular products solely focused on the attractive, growing oncology market with an emphasis on cancer research, diagnostics, and monitoring. Biocare’s significant historical investments in its research and development capabilities, manufacturing footprint, strong executive team and a global sales force provides the scale required to serve a substantial worldwide customer base.