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Beckman Coulter's Q4 Revenues Rise 10.8 Percent as R&D Charge Cuts Profit

NEW YORK (GenomeWeb News) – Beckman Coulter today reported a double-digit increase in revenues for the three months ended Dec. 31, while soaring R&D costs, affected by a charge related to the acquisition of NexGen Diagnostics, cut the firm’s profit 28 percent year over year.
 
The Fullerton, Calif.-based diagnostics and life science products firm brought in fourth-quarter revenue of $789 million, up from $712 million in the fourth quarter of 2006. Strong revenues for Beckman’s clinical diagnostics segment were offset by weaker demand from life science customers, the firm said.
 
Total revenue from Beckman’s clinical diagnostics products increased 12.8 percent over the comparable quarter a year ago. However, the firm said that markets for its life science products “continued to be soft in most geographies.” It said sales of life science products grew 3.7 percent year over year, but on a constant currency basis, life science product sales actually declined .7 percent.
 
Sales of life science products in the US were particularly lower, dropping 10.6 percent year over year, the firm said. Life science product sales to international markets were up 6.7 percent for the quarter.
 
Asked during a conference call this morning if the firm is considering some divestitures for the life sciences business, Scott Garrett, Beckman Coulter president and CEO, who also will become chairman on Apr. 24, suggested that was not the case. “We’re always looking for alternatives, [but] we like our life science product portfolio,” he said. “It’s very profitable. We’ve got a lot of brand loyalty and good customer appreciation for those products, but they aren’t growing as fast as diagnostics.
 
“As we look to the future we have such compelling opportunities for investment, such as molecular [diagnostics] and applying new technology to immunoassay, that the life science products are not competing well for R&D dollars,” he said. “We’re always open to the possibility of a divestiture, but our history and our inclination is that these products are more valuable to us than they probably are to anybody else, so we expect to keep them for the long term.”
 
Beckman posted a profit of $44.8 million, or $.69 per share, down from $62.3 million, or $.97 per share, in the fourth quarter of 2006.
 
The firm’s R&D costs climbed 69.3 percent to $97.5 million from $57.6 million. Included in that increase were charges related to supply chain restructuring and the write-off of roughly $36 million in in-process R&D related to its acquisition in December of NexGen Diagnostics.
 
Beckman’s SG&A costs rose 11.9 percent year over year to $193.2 million from $172.6 million.
 
For full-year 2007, Beckman reported revenues of $2.76 billion, a 9.2 percent increase over revenues of $2.53 billion for 2006. Its profit for the year rose 13.1 percent to $211.3 million, or $3.30 per share, from $186.9 million, or $2.92 per share, for 2006.
 
Clinical diagnostics sales grew 11.9 percent for the full year, while life science products sales dropped 2 percent.
 
Beckman’s 2007 R&D costs were $274 million, up 3.4 percent from $264.9 million in 2006. SG&A expenses increased 6.3 percent to $731.1 million from $687.6 million.
 
The firm finished the year with $83 million in cash and cash equivalents.
 
For 2008, Beckman expects revenue growth to be between 7 percent and 9 percent.
 
The firm’s goal for the clinical diagnostics business is to continue to exceed 10 percent revenue growth in 2008, according to Garrett. He added that he expects life science revenues to be about flat with 2007.
 
"In the first quarter, we expect to commercialize our next chemistry/immunoassay work cell, the UniCel DxC 880i, the first of four new work cells coming in 2008,” said Garrett in a statement. “The new UniCel DxH, our next generation hematology system, should be introduced at the end of 2008, and we continue to make solid progress with the development of our DxN 'sample-to-result' instrument for molecular diagnostics.”
 
Beckman officials said last month at the firm’s annual business review meeting in New York that the initial menu for the DxN will include sexually transmitted disease tests; nosocomial infection tests, including methicillin-resistant Staphylococcus aureus; a compromised immunity test, such as HIV viral load and cytomegalovirus; and urgent microbiology for spinal fluid analysis.
 
“We may have more,” Garrett said at that meeting. “We won’t have less. If we have more, they’ll probably come from additional infectious disease and human genomics categories, including oncology,” he added.
 

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