German industrial giant Siemens AG announced on Wednesday its agreement to acquire Dotmatics, a leading life sciences R&D software maker, for $5.1 billion. The acquisition represents a significant step in Siemens' strategic pivot toward providing enhanced artificial intelligence software solutions for the life sciences industry.
The Boston-based Dotmatics, officially known as GraphPad Software LLC, was founded in 2005 by former Merck & Co. scientists Stephen Gallagher and Alastair Hill. The company has developed a comprehensive "Science Intelligence" platform that helps digitize laboratory data, enhance scientific collaboration, and analyze research findings. Currently, more than two million scientists across 125 countries utilize Dotmatics' software solutions.
Strategic Shift Toward Software and AI
This acquisition aligns with Siemens' ongoing transformation from traditional heavy-equipment manufacturing to higher-margin software businesses. The German manufacturer has been systematically exiting hardware-focused operations to improve profitability through digital solutions.
"Artificial intelligence has emerged as a transformative force across various industries and its application in life sciences is increasingly important," said Siemens Chief Executive Roland Bursch in a statement.
The transaction, expected to close in the first half of fiscal year 2026, follows Siemens' March 2025 acquisition of industrial-simulation software maker Altair Engineering Inc. for approximately $10 billion—the company's largest acquisition to date.
Expanding Market Reach and Technical Integration
By integrating Dotmatics' specialized data applications with its existing AI, manufacturing, and industrial-simulation tools, Siemens aims to create a seamless connection between development processes—from initial R&D stages through to end manufacturing operations. This integration is projected to increase Siemens' total addressable market within the industrial software sector by up to $11 billion.
Thomas Swalla, Dotmatics Chief Executive Officer, highlighted the synergistic potential: "Combining our next-generation scientific intelligence platform and industry-leading scientific applications together with Siemens' Digital Twin and AI capabilities, we'll drive a new wave of innovation in life sciences R&D."
Financial Implications and Growth Projections
Dotmatics, which is backed by venture capital firm Insight Partners, is expected to generate more than $300 million in revenue during the current fiscal year. The company already demonstrates strong profitability with an earnings before interest, taxes, depreciation, and amortization (EBITDA) margin exceeding 40%.
Siemens plans to finance the acquisition primarily through the sale of shares in listed companies, including Siemens Healthineers. The company anticipates near-term revenue synergies of approximately $100 million annually, with potential growth to more than $500 million per year over the long term. The acquisition is expected to be immediately accretive to Siemens' growth, even before considering any synergies.
Insight Partners' Exit Strategy
For Insight Partners, a New York-based venture capital and private equity firm, the sale represents a successful exit from a long-term investment. Insight first invested in Dotmatics in 2017 and later participated in a fund that acquired the company outright in 2021 for approximately $500 million (£500 million).
"The transition of Dotmatics from Insight Partners to Siemens represents a logical next step, empowering Dotmatics to further advance its mission of accelerating innovation within life sciences," said Jared Rosen, managing director at Insight, in an emailed statement.
This transaction comes amid a series of strategic exits for Insight Partners, which realized $8 billion from company sales last year. Recent exits include Alphabet Inc.'s agreement to purchase cloud-security company Wiz Inc., CoreWeave Inc.'s acquisition of AI developer platform Weights & Biases, and Roper Technologies Inc.'s acquisition of CentralReach.
Market Response and Historical Context
Following the announcement, Siemens shares declined by as much as 5.3 percent in early trading in Frankfurt, partly influenced by broader market reactions to US tariff announcements. Despite this temporary setback, the company's stock has gained approximately 16 percent over the past year.
The $5.1 billion deal for Dotmatics ranks as the sixth-largest acquisition in Siemens' century-plus history, underscoring the strategic importance of this investment in the company's digital transformation journey.
Evercore Inc. served as the exclusive financial adviser to Dotmatics on the transaction.
