Becton Dickinson will sell its Clontech unit to Japanese firm Takara Bio for $60 million, marking the end of a nearly nine-month search for a buyer of the molecular biology tools supplier.
The selling price is a far cry from the $201 million BD paid for the unit in 1999, but several years of diminishing revenues and a realization that Clontech did not fit BD's business model made the sale a necessity for the medical device and diagnostics firm. And although publicly announcing last year that Clontech was on the block was a quick and easy way of alerting interested suitors that the business was for sale, BD likely lost some leverage in negotiating a sales price.
For Otsu, Japan-based Takara the Clontech business appears to be a better fit than it was for BD. Takara sells restriction enzymes and PCR enzymes as part of its offering of molecular biology tools, though the firm also is developing cell- and gene-based therapies and biotech products for agricultural applications.
[The sale of Clontech also signals BD's exit from the multi-platform molecular biology tools space. As such, the firm will be delisted from the BioCommerce Week Index.]
In a statement released late last week, Takara said that Clontech's products "in gene function and protein interaction analysis with its newly engineered fluorescent proteins, as well as protein expression vectors," would complement Takara's existing tools. Among Clontech's products are the BD Atlas fluorescent labeling kits for expression profiling, NucleoSpin Extract kits for PCR purification, RNAi systems for regulating protein knockdown, and TransFactor Universal kits for studying transcription factor-DNA interaction.
"I think it's a great first move for a company wanting to be aggressive in this space," said Panna Sharma, CEO and managing partner of TSG Partners, a life sciences corporate advisory firm. "And I think you can expect this to be one of several more aggressive North American moves by Takara."
"The portfolio has such an entrenched presence in laboratories, both academic and pharma, and you can't build that brand presence overnight," he told BioCommerce Week. "The key for them is going to be how to reinvigorate the portfolio."
Sharma also said that he sees the acquisition as a sign that consolidation in North America in the assay reagent sector is going to accelerate. "One other clear thing is I think you can expect to see more cross-border deals happen," he said. "You can look at Invitrogen's deal with [Norway-based] Dynal, Takara's deal, and I think you'll start to see the assay reagent market become more global and less region-centric."
"The portfolio has such an entrenched presence in laboratories, both academic and pharma, and you can't build that brand presence overnight. The key for them is going to be how to reinvigorate the portfolio."
In acquiring Clontech, Takara will be taking on some fairly entrenched competitors in the US, including Qiagen, Invitrogen, Stratagene, and Sigma-Aldrich — all BioCommerce Week Index companies. Takara currently receives 85 percent of its revenue from sales in Japan, but more than 70 percent of Clontech's revenue was derived from the US and European markets, a geographic shift that should provide the Japanese firm with a substantial market opportunity.
Takara expects the acquisition to close in August, with Clontech being folded into a wholly owned subsidiary that will be established in the US. Takara conducts its research and development in Japan but said the Clontech acquisition would strengthen its R&D efforts in both Japan and the US.
BD announced its intention to sell Clontech on Oct. 4, 2004. It initially targeted a sale date by the end of its fiscal 2005 second quarter, which ended in March. BD management later said that it could take until the end of its third quarter or possibly the end of its fiscal year to unload the business (see BioCommerce Week 5/26/2005).
Company officials told BioCommerce Week that one of the reasons the sale took longer than initially expected was the significant number of companies inquiring about Clontech. Due to confidentiality agreements, the firm could not disclose who any of the potential suitors were.
The Franklin Lakes, NJ-based firm retained Goldman Sachs to help find a buyer and said that it would take a $125 million pre-tax charge after closing the sale. BD has been reporting the Clontech business as discontinued operations in its financial results for the past few quarters, even though it remained operational and employs some 220 employees.
Since 1999, Clontech has brought in revenue of roughly $263 million, but its sales have steadily declined over the past few years. Clontech contributed $80 million in revenue for BD in 2001, $73 million in 2002, $64 million in 2003, and $60.5 million in fiscal 2004.
At the time BD disclosed it was selling Clontech, it said that BD Biosciences, the division in which the unit resides, would turn its focus on its cell analysis, discovery labware, and new platforms of imaging and in vitro drug metabolism/toxicity testing. Last year, the firm strengthened its position in the cellular analysis market by acquiring cell-imaging firm Atto Bioscience for roughly $25 million.
And last week, BD announced that it was adding to Atto's offerings by purchasing Scanalytics, a Fairfax, Va.-based seller of scientific imaging software, including deconvolution and 3D restoration and gel analysis software. Even before the acquisition was disclosed, BD Biosciences and Scanalytics had been partners. The firms recently signed an alliance to co-develop image-analysis software for BD Bioscience's automated microscopy platforms, according to BioCommerce Week sister publication GenomeWeb News.
Gene Vivino, vice president of strategic planning and portfolio management for BD's Biosciences business unit, told BioCommerce Week last October, "From purely a market perspective, we are focused on cell analysis, cell sorting, and now with the Atto acquisition, cell imaging. The molecular biology space just doesn't quite tie into [cellular analysis] like we would have liked it to. It's not the business we are focusing on" (see BioCommerce Week 10/7/2004).
BD, which was founded in 1897, has built a $5-billion-a-year business on its medical device, diagnostics, and biosciences units. The foundation of its Biosciences division is its cellular analysis products, but the firm is also a leader in flow cytometry instruments and reagents for both research and clinical markets.
— Edward Winnick ([email protected])