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Agilent Gambles on China as Tough Q2 Overshadows LSCA Revenue Increase

Agilent Technologies this week expanded its footing in Southeast Asia by opening a training center in Shanghai with the intent of increasing the technical capabilities of the company's customer support teams as the company works to solidify a place in the Chinese life sciences market.

The training center is not currently focused on genomics, "but [that] will be an area of focus in the future," Sui-Ching Low, a spokesperson for Agilent's Chinese life sciences division, told BioCommerce Week sister publication BioArray News this week. Low added that trainers will be pulled from the Chinese customer engineer group, as well as Agilent's US and European divisions.

The main goal of the center, according to Low, is to "raise the technical capability of our Chinese and Asian customer support teams to provide fast, effective customer support to keep our customers highly productive."

In addition, the firm will be providing training for customers. Low said that 30 customers have attended training sessions over the past two weeks.

"Before [the center was opened] we needed to send our customer engineers to the US and Europe for training," Low explained. "Now, with the opening of the center here, we can train them in Asia. We can [also] train in Chinese, decrease travel time, and focus on issues [specific to] China and Asia."

Low said Agilent has spent $700,000 in its new Shanghai Training Center, which is located adjacent to the manufacturing and R&D centers the company set up in that city three years ago.

Land of Opportunity?

As Agilent moves to shore up its Chinese operation from its Asian headquarters in Shanghai, the Palo Alto, Calif.-based company is also trying to stake a claim in the Chinese market through government and academic cooperation.

One government-sponsored project Agilent is involved in is the Human Liver Proteome Project, an effort organized through the Human Proteome Organization and led by Chinese researchers. Low said that the company's mass spectrometry and microarray technologies were being used by researchers to identify proteins associated with normal and disease states for liver.

Agilent isn't the only multi-platform tools company to view China as an important and emerging market. Thermo Electron and Invitrogen both have operations in China, and other firms in the BioCommerce Week Index have stated their intention to eventually enter that market (see BioCommerce Week 3/24/2005).

In December, Thermo Electron opened a 90,000-square-foot manufacturing facility in Shanghai slated to product 10 products initially. Thermo also operates a manufacturing facility in JinQiao and has commercial locations in Beijing and Hong Kong, as well as a newly opened office in Guangzhou.

Also in December, Invitrogen spent $8 million to purchase BioAsia, a 5-year-old reagent manufacturer and R&D services provider that will distribute Invitrogen products in China. The firm has since said that it would add 20 sales reps in the Communist country to help grow revenues and speed the integration of BioAsia with Zymed and Dynal, two other recent acquisitions (see BioCommerce Week 5/5/2005).

Invitrogen will consolidate its BioAsia operations into Dynal's facilities in Beijing, Invitrogen CEO Greg Lucier said in a conference call following the release of the firm's first-quarter results two weeks ago. The company will have manufacturing in Beijing and in Shanghai.

Responding to a question from BioCommerce Week following his presentation at the Banc of America Healthcare Conference in Las Vegas this week, Lucier said it makes sense for companies in the genomics tools space to set up shop in China because government funding of the Chinese biotech industry is strong.

Asked whether there was any concern about intellectual property, Lucier said, "We're careful about the work we're doing there. It's a great place to sell, not a great place to create" new products. He said the firm would start by selling "less-sophisticated" technologies there.

Agilent's Low noted that in addition to the Chinese government's support of biotech, the company also is taking advantages of growing opportunities in the clinical trial market "as more clinical trials are conducted in China."

LSCA Revenues Up Slightly In Q2

Earlier this week, Agilent reported that although its overall revenues and profit decreased in the second fiscal quarter, its Life Sciences and Chemical Analysis business posted a 3-percent gain in receipts to $344 million.

Total revenue for the quarter ended April 30 fell 5 percent to $1.7 billion from $1.8 billion during the same period last year.

Research and development costs increased slightly, to $248 million from $237 million during the second quarter of 2004.

Agilent's net earnings for the quarter fell to $95 million, or $.19 per share, from $104 million, or $.21 per share, during the year-ago period.

Orders for LSCA products totaled $171 million, or about 44 percent of the segment total, a 17-percent year-over-year increase. "We are seeing very good growth from large pharma customers in our tools and solutions business," Adrian Dillon, Agilent's CFO, noted during a conference call following the release of the financial results. India, Korea, and China "are seeing continued investment in their generic pharmaceutical industries, as well as plant expansion and the movement of plants by global pharma companies, which continue to drive demand for our life science products in Asia."

As of April 30, Agilent had $2.7 billion in cash and cash equivalents.

— Justin Petrone ([email protected]) and
Edward Winnick ([email protected])

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