Siemens Healthineers agreed to acquire Novartis AG’s diagnostics arm for $223.5 million (200 million euros) in a deal meant to enhance its cancer treatments.

Both companies confirmed the acquisition, and it involved Advanced Accelerator Applications, a division Novartis ( NVS ) purchased in 2017.

The Financial Times reported that Advanced Accelerator Applications operates Europe's second-largest network of cyclotrons. The unit produces radioactive compounds essential for positron emission tomography (PET) scans that detect cancer and other diseases.

Also Read: Judge Rules Against Novartis’ Effort To Halt Generic Launch Of Its Top-Selling Heart Disease Drug.

The deal will expand Siemens Healthineers’ PET radiopharmaceuticals business—the world's largest—into Europe, strengthening its leading position in the imaging market, the Financial Times report adds.

PET scans, often used for diagnosing cancers like lung, breast, and cervical cancer, have become increasingly vital, especially in monitoring cancer spread and treatment response. While PET imaging is more costly and limited in European state-run healthcare systems compared to other techniques like MRI, it is now considered a standard diagnostic tool for certain cancer types.

Erlangen, Germany-based Siemens Healthineers, spun off from Siemens in 2017, sees the acquisition as strategically critical. The radioactive compounds used in PET scans have a short half-life and must be administered on the day they are produced, necessitating localized production close to patients.

Siemens Healthineers' imaging division remains the company's largest revenue generator, contributing nearly 3 billion euros in sales in the last quarter, accounting for over half of total group revenues.

Novartis ( NVS ) decided to sell Advanced Accelerator Applications' diagnostics unit, viewing it as a low-growth segment.

The pharma giant acquired Advanced Accelerator Applications for $3.9 billion to gain access to its innovative radiopharma drugs, including Lutathera, a treatment for neuroendocrine tumors expected to generate $704 million in sales this year.

Novartis ( NVS ) noted that a dedicated diagnostics owner would better support molecular imaging's growth prospects, leading to this divestiture.

In addition to the sale, Novartis ( NVS ) and Siemens Healthineers will collaborate to enhance the supply of nuclear isotopes used in radiopharma drugs like Lutathera.

Price Action: NVS stock is up 0.47% at $119.12 during the premarket session at last check Monday.

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