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After a Two-Year Buying Spree, Invitrogen Aims to Consolidate Pieces Through Realignment Plan

After a buying spree over the past two years that brought in a wide array of businesses and technologies, Invitrogen is realigning its divisions in an attempt to better serve its customer base and accelerate the firm's revenue growth, Chairman and CEO Greg Lucier said this week.

"Our whole goal here is to accelerate our growth rate," he told BioCommerce Week. "We have greatly expanded the portfolio of tools we have in the last 18 months, and in that expansion … what we knew we had to do at some point was realign the company to … have this dichotomy in terms of how we compete — both being the one-stop shop, but also being best of breed in certain technology categories."

Lucier added, "We knew at the beginning of [2005] that we had a very aggressive acquisition program for the year, and at some point we were going to have to realign the company to fully absorb the capabilities we brought in."


"Our whole goal here is to accelerate our growth rate. We have greatly expanded the portfolio of tools we have in the last 18 months, and in that expansion … what we knew we had to do at some point was realign the company to … have this dichotomy in terms of how we compete — both being the one-stop shop, but also being best of breed in certain technology categories."

Since Lucier assumed leadership of Invitrogen in May 2003, the firm has spent at least $1.3 billion to acquire 11 businesses (see sidebar). During that time, the number of Invitrogen employees has grown 80 percent from roughly 2,800 to more than 5,000 today, and the firm's sales have grown by more than half from approximately $770 million annually to an estimated $1.2 billion in sales for full-year 2005.

The realignment plan, which will take effect Jan. 1, calls for Invitrogen's BioDiscovery unit to have two divisions, Life Sciences and Enabling Technologies. The BioProduction unit, though it will remain virtually unchanged, will include a division called Bio-Production Services and Systems.

Invitrogen said these new divisions would "drive greater customer intimacy" and provide closer integration of new technology sales specialist teams — a plan that was on Lucier's mind in September at the UBS Global Life Sciences Conference in New York, where he said that the firm intended to hire more sales specialists (see BioCommerce Week 9/29/2005).

The rapid pace at which new technologies have been added to Invitrogen's portfolio has presented a challenge for its salesforce. Lucier had said at that conference that product managers and teams are being trained to focus horizontally — in other words, on bundling more and more products — but he has also said that the firm could use more specialists in particular application areas.

"We're still going to have a large generalist sales force, but now augmented and complemented by teams of specialists in this technology workflow set of areas," he said this week. "Those specialist teams will then align with product development teams in the organization, and then those development teams [will be] part of these new divisions."

The specialist teams will not only advise the generalist sales force but also will have a quota for selling certain technologies, Lucier said. He noted that the model of using specialists with a generalist sales force is commonly used in the medical device industry. "We realized that with our growth and this expansion we finally had to move to that type of model."

Lucier said that most of Invitrogen's specialists came from its acquisitions, but the firm is in the process of hiring as well. As of the new year, the firm's sales force will consist of roughly 65 percent generalists and 35 percent specialists, according to Lucier.

Since Greg Lucier assumed leadership of Invitrogen in May 2003, the firm has spent at least $1.3 billion to acquire 11 businesses. During that time, the number of Invitrogen employees has grown 80 percent from roughly 2,800 to more than 5,000 now, and the firm's sales have grown by more than half from approximately $770 million annually to an estimated $1.2 billion in sales for full-year 2005.

Below is a list of those acquisitions and the purchase price when available.

Invitrogen's 2003-2005 Acquisitions
Aquiree
Closing Date
Purchase Price
Quantum Dot
October 2005
undisclosed
BioPixels
October 2005
undisclosed
Caltag
May 2005
$20 million
Dynal April 2005 $391 million
Zymed
January 2005
$60 million
Bio Asia
December 2004
$8 million
DNA Research Innovations
October 2004
$35 million, but could reach $65 million based on milestones
Xeotron
May 2004
undisclosed
Protometrix
April 2004
undisclosed
BioReliance
February 2004
$500 million
Molecular Probes
August 2003
$325 million

He also said layoffs were not a part of the realignment.

Matching the Technologies

The new Life Sciences division will focus on selling molecular biology tools for mostly mature applications, such as cloning and protein expression, protein analysis, gene-expression profiling, and drug-discovery products. The division will be led by Senior

Vice President Jon Hindar, who had been CEO of Dynal, which Invitrogen acquired earlier this year (see BioCommerce Week 2/10/2005).

"The Life Sciences division is primarily driven by our heritage of serving scientists on the research side," Lucier said. "Now, they're also going to be pursuing applications outside of just core research. Inside that division you have a group called research essentials, which are competent cells and enzymes and things that have been around a long time.

"But you also have some fast-growing businesses in there as well, such as our nucleic acid-purification business that we've invested over $100 million in over the last two years to become a formidable competitor to Qiagen," for example, Lucier added.

He said that division also includes the firm's drug-discovery business, which is growing at 40 percent per year. "But, they all have one thing in common, and that is the number one priority is serving the research scientist," he said.

The Enabling Technologies division, which also primarily targets the research market, will focus on nanotechnology, imaging and microscopy, cell separation and analysis, labeling and detection, bead-based separations, and the firm's antibody center of excellence. Invitrogen said this division will include its Molecular Probes, Dynal, BioSource, and Quantum Dot products — all of which Invitrogen acquired over the past two years. The division will be led by Senior Vice President John "Kip" Miller, who joined the firm from BD Biosciences, where he served as vice president and general manager of the Americas.

However, Lucier said that "if you look at the capabilities in that business, it's really set up for broader applications." He cited molecular diagnostics as a field that would be served by the technologies that have been placed together in that division.

The firm's BioProduction division will include Invitrogen's Gibco and BioReliance businesses, and also will include the firm's bioproduction process development initiative. The division will be led by Nicolas Barthelemy, who is currently head of global operations for Invitrogen.

The unit has struggled this year, and in the third quarter posted a 2-percent decline in revenue year over year to $107.7 million (see BioCommerce Week 11/3/2005). During a conference call following the release of that period's results, Lucier said that softness in the BioReliance business — which accounts for around 10 percent of Invitrogen's total revenues — is expected to continue for the next couple of quarters, with a recovery coming in the second half of 2006.

"We have completely changed around the operations team [at BioReliance] in the last 90 days," Lucier said during the Q3 conference call. "We have moved to a work-cell cluster, where we have technical people, lab people, [and] quality control people all on teams centered on particular testing areas. We think that's going to deliver … consistent quality and consistent service levels that are essential to compete in that business."

In addition, Lucier said at the UBS conference that it is likely Invitrogen would add to its BioProduction portfolio (see BioCommerce Week 9/29/2005). He said that as pharmaceutical firms come to rely more and more on outsourcing certain activities, the need for services such as those provided by its BioProduction unit will increase. However, Lucier said the company would not buy a contract research organization.

Separately this week, Invitrogen said that it will hold its 2006 financial guidance conference next week in New York. Lucier said that for the time being the firm would continue to provide guidance and report financials for the BioDiscovery and BioProduction units as whole rather than break them down by the new divisions.

— Edward Winnick ([email protected])

 

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