Invitrogen laid off 60 employees on Aug. 31 and plans to lay off an additional 34 staffers on Oct. 27, according to California employment records.
The August lay-offs were in Invitrogen’s South San Francisco, Calif., facility, while the ones scheduled for Oct. 27 will be in the company’s Burlingame space, the records show.
The lay-offs are not that surprising, considering Invitrogen is in the midst of reviewing its entire portfolio, and company officials had said during the firm’s second-quarter conference call in August that they had planned to shut down the South San Francisco operations and move staff and products to its facilities in Camarillo, Calif., or Eugene, Ore. (see BioCommerce Week 8/9/2006)
It was not immediately clear what businesses or departments have been or will be affected, but the lay-offs represent approximately 2 percent of the company's 4,800 employees worldwide. Invitrogen officials did not answer questions from BioCommerce Week by press time.
What is known is that the South San Francisco facility comprises Zymed Laboratories, the antibody manufacturer Invitrogen bought at the start of 2005, while the Burlingame space comprises Caltag Laboratories, a maker of antibodies and reagents for flow cytometry applications that Invitrogen acquired in the summer of that year (see BioCommerce Week 1/13/2005 and 5/19/2005).
It is not clear whether other business units are affected and whether the lay-offs are tied to the formal business reassessment that has been ongoing at Invitrogen since the company disclosed lackluster second-quarter revenue growth and cut its full-year 2006 revenue forecast in August.
During the company’s second-quarter conference call on Aug. 3, Chairman and CEO Greg Lucier and other company officials laid much of the blame for the disappointing revenue, which missed analysts’ estimates, on poor sales in its BioProduction division and its sera products, but added that no part of its business portfolio would be safe from scrutiny.
Lucier said that during the first half of the year the company had been investing heavily in R&D and technical sales specialists while operating generally on “a presumption on revenue being higher than it actually turned out.”
After moving into new business segments and having “greatly expanded its footprint the last couple of years,” he said the company now needs to step back and reassess its different business segments. Lucier had singled out Invitrogen’s sera business as one segment that will be especially scrutinized but added that Invitrogen will “conduct a strategic review on each and every one of the businesses in which we operate.”
Lucier recently told investors at the UBS Global Life Sciences Conference in New York that the firm was on track to complete the portfolio review by the end of the year and suggested that divestitures would likely come after that (see BioCommerce Week 9/27/2006).
“We’re not talking about huge chunks of the business, let me make that clear,” said Lucier. “We’re talking about small pieces of revenue, overall, when you look at the portfolio.”
He said the firm was looking to keep pieces of the business that are differentiated by science and have higher margins.
What’s in South San Fran and Burlingame?
Invitrogen acquired Zymed for $60 million in cash in the beginning of 2005. The company, based in South San Francisco, offers immunoassay reagents for research and clinical diagnostics. At the time of the acquisition Zymed had more than 2,000 antibodies and related products suitable for research in the areas of cancer, neurological diseases, and infectious disease.
Invitrogen had said at the time that following the acquisition Zymed's South San Francisco facility would become the main site for Invitrogen's antibody production and distribution. It also said that it expected Zymed to generate $15 million in sales during the first year following the acquisition.
Invitrogen acquired Caltag Laboratories for $20 million in cash in the summer of 2005. The company, based in Burlingame, makes antibodies and reagents for flow cytometry applications, including tandem dyes for multi-color flow cytometry, and was expected to complement Invitrogen’s portfolio of proteomics technologies
In addition to research tools, it has developed technologies for diagnostics. Fifteen of its products are FDA-approved class II in vitro diagnostic devices. At the time of the acquisition, Caltag’s German subsidiary offered more than 200 antibodies approved for diagnostic sales in the European Union.
"Caltag's strength in supporting flow cytometry work is a natural fit for this goal through its synergies with Invitrogen's upstream proteomics technologies," Cheri Walker, then Invitrogen's vice president of proteomics, said in a statement at the time. (Walker has since left Invitrogen and joined Qiagen as vice president of mergers and acquisitions.)
Caltag's US staff of about 50 was to remain in the San Francisco area as part of Invitrogen's Antibody Center of Excellence. Caltag was expected to have approximately $10 million in sales in the following year.
Invitrogen is scheduled to release its third-quarter earnings on Oct. 26. The firm has not provided guidance for its third-quarter results. But after the lackluster second quarter, officials lowered revenue guidance for the year to $1.26 billion to $1.3 billion from previous expectations of $1.3 billion to $1.35 billion.
— Edward Winnick contributed to this article.