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Beckman, Facing Flat Revenues, Hopes New Platforms, Consumables Will Drive Growth

Beckman Coulter, facing flat revenue in 2005, expects that new product launches and a hoped-for increase in consumable sales will drive growth for the remainder of this year and next year, according to Jay Steffenhagen, senior vice president of development and strategy.

The firm, which expects 2005 receipts to be largely unchanged from last year's $2.4 billion, has launched several new instruments in the past year aimed at the traditional in vitro diagnostics market, the emerging molecular diagnostics market, and the biomedical research community. The latest of those was this week, when Beckman began shipping its new Vidiera NsP nucleic sample-preparation platform, which the firm hopes will be purchased as a companion to its recently launched Vidiera NsD nucleic sample-detection system.

Steffenhagen told investors at the UBS Global Life Sciences conference in New York last week that Beckman would also look for "bolt-on" acquisitions — much like its purchase earlier this year of Agencourt Bioscience — to enhance its product portfolio. He said the firm would look to add "different product groups for the same customers" in considering acquisitions.

He cautioned, however, that Beckman was finding it difficult to compete with private equity investors in bidding for businesses.

New Product Launches

The Vidiera NsD and NsP systems are keys to Beckman's plans to grab a piece of the molecular diagnostics market. Although the two instruments do not have to be purchased together, and the NsP can be used for sample prep on other platforms, the firm is offering the two platforms in a bundle to labs.

Dwight Denham, business manager for Beckman, recently told BioCommerce Week that the NsP was designed to prepare samples for downstream analytical processes and would compete against sample prep systems including Roche's AmpliPrep for its Cobas Amplicor or TaqMan 48, and its MagNApure for the LightCycler system (see BioCommerce Week 7/28/2005).

Beckman intends to eventually replace reagents made by Qiagen that are used on the NsP with ones made by Agencourt, but company officials have not said when that will happen. One of the key reasons cited by Beckman in buying Agencourt was the addition of Agencourt's Solid Phase Reversible Immobilization technology for isolating and purifying DNA and RNA in Beckman's automated sample-prep systems for both biomedical research and molecular testing (see BioCommerce Week 5/5/2005).

Beckman already has a strong presence in the clinical diagnostics market — particularly clinical chemistry, immunodiagnostics, and hematology — from which it currently derives 71 percent of its revenue, CEO Scott Garrett told attendees of the Banc of America Securities Health Care Conference in May (see BioCommerce Week 5/26/2005). He also noted that the firm expects high growth next year from the Vidiera instruments.

But the Vidiera instruments aren't the only platforms the firm is relying on to drive sales growth. Within the last 10 months, Beckman also launched the GenomeLab GeXP gene-expression instrument and the UniCel DxC 600 Synchron and 800 Synchron clinical analyzers.

The GenomeLab GeXP is a high-throughput quantitative gene-expression instrument that also can perform sequencing, heterozygote detection, SNP detection, STR, visualization, AFLP and LOH. The instrument is based on the company's capillary electrophoresis technology and pushes Beckman into a crowded market, where it will compete against Affymetrix, Agilent, Applied Biosystems, GE Healthcare, and CombiMatrix. It also will compete with newer, quantitative gene-expression technologies offered by Illumina, Solexa, and Sequenom.

The UniCel DxC instruments build on an earlier iteration of the UniCel system launched in 2003, offering greater throughput. As a result, the firm expects reagent sales to rise between 15 percent and 50 percent as more customers adopt the new instruments, Steffenhagen said. He noted that more than 200 of the UniCel systems were shipped during the first half of 2005.

A Beckman spokesperson added that although the company expects to sell more DxC systems, "some of the increase in reagent usage arises from doubling the number of on-board chemistries. While the DxC and its predecessor are capable of performing more than 100 different tests, doubling the on-board chemistries enables us to handle a broader spectrum of the routine testing volume that formerly was put off to other lab systems."

Beckman currently derives roughly 64 percent of its revenue from aftermarket products, including reagents, supplies, and service, while the remaining 36 percent of its sales comes from instruments, Steffenhagen said.

The company brought in revenue of $2.4 billion in fiscal 2004, and Steffenhagen said Beckman expects 2005 revenue to be between $2.41 billion and $2.46 billion.

Beckman recently announced a restructuring of the company, laying off 350 employees and shifting its sales focus to leasing instruments to customers rather than pursuing big ticket purchases (see BioCommerce Week 7/28/2005). As part of the restructuring plan, Beckman folded the clinical diagnostics and biomedical research divisions into one, but created four business groups focusing on chemistry systems, immunoassay systems, cellular systems, and discovery and automation systems.

— Edward Winnick ([email protected])

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