Agilent Technologies had a busy week, completing its acquisition of informatics company Scientific Software for an undisclosed sum and inking a new pact with Caliper Life Sciences for the development of clinical diagnostic applications for certain instrument platforms.
The acquisition of Scientific Software would give Agilent one of the largest installed bases of chromatographic data systems — SSI has more than 120,000 installations — and a broad portfolio of laboratory informatics software in the life science and chemical industries.
The purchase would enable Agilent to provide a suite of software products that "addresses the complete life cycle of analytical information, from data acquisition to knowledge management and retention," the company said in a statement. It will also allow scientists "to collaborate across laboratory operations, linking information from a wide range of instrument platforms and data sources," said Jim Miller, director of software for the Life Sciences and Chemical Analysis business.
Most of SSI's 80 employees have joined Agilent as part of the company's Life Sciences and Chemical Analysis business, Agilent said.
SSI, based in Pleasanton, Calif., had annual sales of more than $18 million in 2004. The company's key products include: OpenLAB, a Web-based software framework that joins a chromatography data system with comprehensive Enterprise Content Management and Business Process Management; EZChrom Elite, a chromatography data system with more than 60,000 licenses installed, which has the ability to control more than 290 instruments from 26 vendors; Enterprise Content Manager, a software platform that provides a secure, central repository and content services that enable organizations to capture, manage, legally sign, archive, and re-use business-critical information; and Business Process Manager, a workflow product for streamlining and automating laboratory business processes.
Agilent has been the exclusive distributor of SSI's ECM since July 2004, and is currently using the technology in-house. An Agilent spokesperson said the unit expects to expand the application of this technology within the business group.
More broadly, Agilent said that following the acquisition it plans to "continue development and support of each of these product lines with a commitment to open systems, industry standards, and interoperability with other instrument hardware and software providers." Agilent also plans to support and enhance SSI Instrument OEM partnerships, the company said.
Expanded Relationship with Caliper
The Palo Alto, Calif.-based firm also announced this week that it had taken a non-exclusive license to the majority of Caliper's microfluidics patent estate to develop clinical diagnostic applications for the 2100 Bioanalyzer, the 5100 Automated Lab-on-a-chip, and future instrument platforms.
Agilent's 2100 bioanalyzer was developed in collaboration with Caliper and has become a sought-after tool in microarray laboratories for testing RNA sample quality.
The firms also entered into a supply agreement under which Caliper will be exclusive supplier of planar LabChip products for the 2100 Bioanalyzer and future instrument platforms over the next five years. Agilent will pay Caliper an upfront license fee and royalties on future sales of diagnostic LabChip products covered under the agreement. Further terms of the agreements were not disclosed.
Semiconductor Unit Draws Bids
In other news this week regarding Agilent, the Wall Street Journal reported Monday that private equity firms Kohlberg Kravis Roberts and Silver Lake Partners have emerged as the top bidder in an auction for Agilent's semiconductor business. The unit could fetch as much as $2.5 billion, according to sources close to the matter. The partnership between KKR and Silver Lake is competing against other partnerships forged by Bain Capital and Warburg Pincus as well as Texas Pacific Group, CVC Partners, and Francisco Partners, according to the Journal.
Agilent has yet to confirm that the semiconductor unit is on the block and declined to comment when asked by BioCommerce Week about the article. But people familiar with the auction said that it could conclude by the end of this week.
The sale of the semiconductor business would not be a big surprise. Agilent officials have hinted on at least a couple of occasions recently that business units unable to meet certain long-term financial goals would be under review for possible divestiture. And at the JP Morgan Technology Conference in May CFO Adrian Dillon said that the semiconductor business wasn't core to the company.
While Agilent is not known primarily for its life sciences business — it lacks best-in-class products — the LSCA unit had consistently returned double-digit quarterly revenue growth for six consecutive quarters. That run ended with the most recent quarter, when the LSCA unit reported quarterly revenue growth of 3 percent to $344 million. While certainly not spectacular results, the unit outshined the firm's overall performance: a 5-percent decline in second-quarter revenue to $1.7 billion.
The semiconductor business unit posted a 9-percent decline in revenue to $414 million in the second quarter, which ended April 30.
The LSCA unit has grown from accounting for 11 percent of Agilent's revenues in 2000, and operating at break-even levels, to providing an expected 20 percent of total revenues in FY '05, which ends in October.
— Edward Winnick ([email protected])