Skip to main content
Premium Trial:

Request an Annual Quote

With $8M Bio Asia Acquisition, Invitrogen Sows Growth Seeds in Gem Market of Asia-Pacific

With the announcement last week of its plans to acquire Shanghai-based Bio Asia, a 5-year-old reagent manufacturer and R&D services provider, Invitrogen took another step in ramping up its presence in the Asia-Pacific market, which CEO Greg Lucier described as the “real gem of our business.”

The expansion of the availability of Invitrogen’s products, to be distributed directly by Bio Asia in China, and through existing channels across Asia, is part of Invitrogen’s strategy for growth. The company told analysts last week at its annual guidance meeting that it expects FY ‘05 revenues to grow by 6 to 8 percent, excluding any benefits from currency exchange, or by acquisition. The company’s Bioproduction segment is forecast to grow at 11 to 12 percent, compared to 2004, while the Biodiscovery segment will grow at 4 to 5 percent, the company said.

“We think we are getting to the point where we can grow our revenues by good high single-digit rates over the next several years,” Lucier told analysts.

Invitrogen is buying Bio Asia in an $8 million cash transaction subject to regulatory approval. The deal was announced on Dec. 8, three days before the three-year anniversary of China’s acceptance into the World Trade Organization. The Dec. 11 anniversary marks a milestone where China, bound by the treaty it signed to gain entrance into the body, must “liberalize the availability, and the scope of the right to trade” throughout its territories, according to the document.

While the WTO treaty removes obstacles to trade in the world’s most populous market, the legal and cultural framework for the protection of intellectual property in China remains a gray area, and one that Invitrogen will not test initially.

“Nothing of high IP content is going to China,” Lucier said. “We want to protect [IP] in our labs in the US, and we will watch over the next couple of years before we transfer anything piece-by-piece to China.”

China, he said, is a fertile territory and Invitrogen is an early player.

“You see a lot of Western companies dabbling there,” he said. “None are very big and all are using distributors. In our space, no one has made the big plunge in terms of bigger, broader distribution networks.”

China for China, India for R&D

In the Asia-Pacific region, revenues from China and Japan are growing at a double-digit rate, said Lucier. Invitrogen will invest $20 million in China over the “next few years,” including building a manufacturing facility in Shanghai, he said.

“We will grow from $15 million [in revenue] to $25 million next year, and we expect similar 60-percent growth over the next couple of years in China,” he said. “It’s great business for us.”

The company’s China strategy is to localize its product line.

“What we are doing is China for China,” Lucier said. “We are manufacturing products that really have no relevance to other markets around the world. In those markets, we have to be much more local with what we do, such as smaller packaging, and the pricing of those tools in order to make us a preferred supplier.”

The Chinese government will spend $600 million on pure research and biotechnology next year in an environment where research grants grow 10 percent year-over-year, and pharmaceutical-research spending growing 30 percent, Invitrogen said. All that activity is attracting Chinese scientists back to the country at a “profound rate,” Lucier said.

The molecular biology research being conducted in the country is “pretty basic stuff,” Lucier said, with the exception of tissue engineering, which is “incredibly advanced,” he said.

“The restrictions of terms of testing are less than what we can do in the US,” he said. “It is a key area that is very interesting due to the regulatory nature of China.”

Still, China will be a manufacturing base for Invitrogen, while India, he said, will serve as a site for research and development.

“We have already mobilized for that — we have the labs, we are hiring people and we have moved one of our scientists of Indian descent over there — and that will only get bigger,” he said.

Lucier did not mention whether this movement would result in layoffs or other cost-cutting efforts.

Elsewhere in its global markets, Lucier said growth in Europe is slower and the company is countering that by investing in its distribution channels; Latin America revenues are growing at double-digit rates, but the market is flat overall. Canada contributes 2 percent to Invitrogen’s revenues but, more critically, serves as a key test market for the company.

“Canada is the proving ground, like test tracks are to Detroit,” he said. “[Canada] is quite representative of the advanced research markets you see around the world.”

Product Focus

After integrating some eight acquisitions over the past two years, and bringing in a new chief financial officer — changes that Lucier called ‘enormous” — Invitrogen will focus on executing product rollouts in 2005, he said.

He pointed to two product lines — nucleic acid purification, a new business for Invitrogen that will launch in January, and the human-content ProtoArrays, which launched this year.

Invitrogen’s $35 million, all-cash purchase in October of Kent, UK-based DNA Research Innovations will enable the company to gain entry into the nucleic acid purification market, which is dominated by Qiagen.

“We bought DRI but I would tell you that is the tip of the iceberg of a pretty massive investment to be the market leader in terms of the technology of nucleic acid purification,” he said.

The rollout, marked by comparison to Qiagen nucleic acid purification technologies, will have milestones in June and year’s end, Lucier said.

“We will have 70 percent of the revenues of the No. 1 company in this space covered in terms of we think better technology,” he said. “At the end of the year, we will have 100 percent of their revenues covered by our alternative technology.”

The goal, he said, is to be a strong No. 2 player in the market.

— Mo Krochmal ([email protected])

 

The Scan

Should've Been Spotted Sooner

Scientists tell the Guardian that SARS-CoV-2 testing issues at a UK lab should have been noticed earlier.

For Martian Fuel

Researchers have outlined a plan to produce rocket fuel on Mars that uses a combination of sunlight, carbon dioxide, frozen water, cyanobacteria, and engineered E. coli, according to Gizmodo.

To Boost Rapid Testing

The Washington Post writes that new US programs aim to boost the availability of rapid at-home SARS-CoV-2 tests.

PNAS Papers on Strawberry Evolution, Cell Cycle Regulators, False-Positive Triplex Gene Editing

In PNAS this week: strawberry pan-genome, cell cycle-related roles for MDM2 and MDMX, and more.