Skip to main content
Premium Trial:

Request an Annual Quote

Carr Goes for Fuel Efficiency


By Adrienne Burke


As if keeping tabs on 12 direct reports in England, Sweden, and the US via daily videoconferences and monthly in-person meetings doesn’t keep his head spinning fast enough, Andrew Carr, president of Amersham Biosciences, has stationed himself in a fishbowl where he can’t possibly avoid distractions. In fact, he invites them.

Just outside his glass-paneled office, a flat-screen TV hangs from the ceiling, tempting staffers and customers to pause on their way to the training room to catch a minute of CNN. It gives Carr a chance to invite them in for a chat. When new hires start, they spend their first day at a desk a few feet from his see-through door. That way he gets to know the new faces. He’s even thinking of rearranging his office furniture so he’s never in a position to have his back to passersby. “If I’m sitting here on my own I get miserable,” the amiable Carr explains. “I always encourage people to come by. I’m a people person more than anything.”

What the next year will show is whether Carr is equal parts shrewd business person.

The greater Amersham PLC, which professes a mission to provide platforms that “enable personalized medicine,” houses two companies — Amersham Health, a $1.3 billion medical diagnostics and therapy outfit run by former Aventis exec Peter Loescher in the UK, and the Piscataway, NJ-based Amersham Biosciences, under Carr.

Carr’s $1 billion business is divided in two again. The “protein separations” half, managed by Carr’s underling Peter Ehrenheim in the UK, turned revenues of about $400 million in 2001 — a 37 percent profit margin. Number one in its market, Carr calls its chromatography, filtration, protein separations, and DNA synthesis products “the gold standard.”

The other half of the 43-year-old Brit’s bailiwick, “discovery systems,” comprised of the bioassays, genomics, informatics, and proteomics businesses, has some weak links. Its $600 million sales in 2001 left an operating loss in the range of $35 million. And, as Carr points out, in the current economy, investors are putting “a much more intense focus on short-term profitability.”

Carr’s self-stated goal is to determine “how I drive that into profit quickly enough without throwing the baby out with the bathwater.” In late January, Carr met with GT in his fishbowl, and, with the occasional nod or wave to colleagues on the other side of the glass, he chewed over his options including consolidating operations, reducing R&D, and simplifying customer service.


GT: Your separations division is strong and growing. Discovery is not. What will you do to bring up discovery?

Carr: We think the discovery systems business holds great potential for the future, but the issue here is profitability and we’ve made no bones about that. We’ve got to get that business into profit — it’s not at the moment. The challenge for us is doing that in an economy that’s slowed. Had the economy been growing faster … it would happen sooner. Particularly the [decreased] demand for instrument systems that every life sciences company is complaining about is affecting the growth rate.

Therefore we’ve got to take other steps, which are to look at our cost base, and look at the customers that we focus on, and the efficiency with which we manage it. The challenge for discovery systems is getting it into profit in short term, but to do it in a way that doesn’t destroy the future.

The field that we work in — genomics, proteomics, cellular biology, and informatics — is going to be a big growth area for the future, there’s no two ways about it. The products we supply are going to be central to creating a foundation for all the molecular medicine that will come. So it’s absolutely the right market to be in, it’s a tremendous market to be in. I wouldn’t pick another one to work in.


Your separations business is number one in its market. Does your discovery business stand a chance of being number one? Affymetrix has already got the number one position in arrays and ABI is number one in sequencing.

ABI is definitely number one in sequencing, but where we’ve really made inroads is in the higher-throughput sequencing area with our MegaBACE instrument. We have over 1,000 MegaBACEs now installed and running in the field, which is pulling through the juice that we want to see.

Sequencing has slowed down in growth. The Human Genome Project was a massive injection of cash, so there was a big blip in funding. Some people were saying sequencing [would] disappear, [but] there’s still only a fraction of all this sequencing being done that has to be done.

Our strength is in the high end of sequencing, but also in the reagents that are used globally on sequencing. We have a lot of the IPR on thermo stable enzymes and on the dyes that are used to detect the base sequence. That’s where we’re very, very strong.

In other parts of the genetic analysis area, then, what we see is that the growth areas of the future are in gene expression and genotyping. And what are the right platforms to have for that? Well, it’s arrays.

The acquisition of CodeLink gave us the technology platform that we will apply to selective parts of [the DNA analysis] market where we think that it offers certain advantages over other technologies, particularly when you bundle it with other things that we can offer.

In the same way that ordered arrays are useful for looking at large numbers of data points in DNA analysis, it will be true also in protein analysis. A lot of people, when asked, ‘What do you recognize Amersham for?’ will say protein work, protein analysis. So we’ll be taking the CodeLink platform into that area as well.

CodeLink will also offer potential in diagnostics in the clinical market.


How is the process of merging CodeLink into your company going?

It’s been pretty typical of the way we work when we do an acquisition. As a company we don’t invent a great deal ourselves. We tend to take inventions that come from academic environments, that may have gone through some VC funding to get into proof of principle, and then into early development, and possibly are just starting to come into the market. It’s usually at that point that we would take a step forward to access these kinds of products and technologies. CodeLink was exactly that kind of step.

In other occasions we take minority or majority equity stakes. What we tend to do with all of these is allow the entities to exist for a period of time. It can be a number of years before we fully integrate them, and we may allow it to be quite a long period of time.

In the case of Cimarron, for example, we have a majority stake, which gives us control, but we’ve kept it in Salt Lake City. We kept the people there and pretty much the management team in place. We then feed it in through our sales and marketing infrastructure. We try not to stifle these groups.

IRI — the group that developed the LEADseeker technology for us — we’ve kept as a business up in Canada and I think we’ll continue to keep it there.

On other occasions we will eventually migrate people, and that could involve closing down sites, migrating staff that we would like to offer employment to. When you acquire a group of 30 or 100 people it’s a natural expectation that maybe half those people would not in the long run want to be part of a big corporation.

Some of the acquisitions we’ve done in the past are getting to the point where we’re likely to want to more fully integrate them. One of the reasons that the discovery systems business hasn’t moved as quickly as we’ve wanted it to into profit is that we’ve been managing a complexity of sites. We’re getting to the point where we’re probably going to want to integrate some of those.

On the West Coast we now have three or four facilities and I think you’ve got to ask the question, ‘Can we afford to have three or four West Coast facilities?’


Then as for CodeLink, will you integrate it or leave it standing alone?

We had to move the facility down the road from the old Motorola facility because it was a million-square-foot electronic manufacturing facility. We have a group of about 90 working there. We’ve more or less just transferred the production group and some R&D and marketing people into a new facility where we have the clean rooms that we need to do the project.


But any of these sites could be under consideration for being condensed?

Yeah, when the time is right. The important need is not to stifle creative, innovative groups when you acquire the whole thing or a part of it. Try to keep them at arm’s length long enough to get the product and the technology established, but leverage the infrastructure we’ve got in terms of giving them support and access to the market. When things have taken hold properly and when we’ve gotten to understand each other — when there’s a management group from within that company that understands Amersham as an entirety — and when the cost base gets right, then I think looking to integrate is an inevitable requirement. Because if not, we’re going to end up with 20 manufacturing sites and we can’t do that.


Is Amersham Health also working with your CodeLink group?

Not at the moment, although interestingly a handful of the major pharmaceutical companies in the world have asked us to work with them across imaging and gene expression and protein analysis. Not so much in terms of doing diagnostics for treatment today, but in terms of doing diagnostics associated with a clinical trial.

They’re asking us to help them in the imaging during the clinical trials, but also to start to help them in these more diagnostic tests. That’s as it moves on to drug development in the clinic.


Are you more likely to work on diagnostics with big pharmas, or smaller biotechs that are revisiting failed or existing drugs?

We have worked historically with both the big pharma and the biotechs and they’re both really important to us. Big pharmas have gone through a period of reflection in the past year and now they’re starting to come back to look more clearly through protocols for how they use this information.

To actually use all of these technologies together in drug development is pretty costly. A big pharma company could serve the infrastructure to use imaging with us and all these other kinds of drug development technologies in a way that’s more cost effective because they’ll apply it to several different drug candidates, whereas the smaller biotechs will find it difficult.


Let’s talk about the percent of your revenues spent on R&D — 13 percent is high.

We’re high, yes. We have put a lot, increasingly, into R&D over the past five years. We’ve stated that we’re going to moderate that growth and bring it more in line with sales growth. What we have done over the past few years as well is to put more R&D into the separations business. So we had a big injection of investment in our discovery systems business, we’re slowing that down, we’ll put more R&D into separations, and we will not be growing R&D in discovery systems at the same rate that people saw in the past. We’ve got a good technology war chest.

Any company has to focus on its growth drivers and we think a lot of very good products that we’ve brought into the market in the last couple of years are going to give us that growth: LEADseeker, the IN Cell instrument, the Ettan system, workflow systems for informatics, CodeLink, genome amplification technologies such as TempliPhi. We’ve got a range of DNA purification products that are going to be very important for us. We’ve got the growth drivers there.

The issue is, of course, how robust is the market going to be in 2003 and 2004? In terms of our R&D spend, we’re moderating that in discovery systems. And in terms of our SG&A, well, we’re looking at making sure we don’t grow that out of line with sales.

But also we’re looking at whether we get a better return on the marketing expenses that we incur. We have a great relationship with our customers. We have a long-term partnership way of working with the pharma, the biotech, and the leading academic accounts. I think we can continue to better serve the needs of our customers in a cost-effective way. If you’re a researcher in a laboratory with a question, you may want to pick up the telephone and call us, but a lot of researchers would prefer to go on the Internet, type in the question and get the answer. So we’re putting more into our Internet channels.

On the other hand, if you’re an important customer for us in terms of the volume of the sales that you are bringing through, or we have a close strategic relationship with you because we know there’s a good opportunity for us to work together in the future, then of course we do have available people who will talk to you.

But all of that has costs associated with it, so we don’t want to overburden the customer who has a simple question with costs — we want to give them a very cost-effective way of getting technical support and sales support. And then we’re going to increasingly put our expensive resources behind the more complex questions and they tend to be [from] customers in big academic institutes who are trying to work with systems biology or in the pharmaceutical industry who similarly are trying to tie together pieces of information.


Since you’re talking about customer service, I did a similar sit down last month with your former sales and marketing VP, Peter Coggins, and he claimed that PerkinElmer, which he now heads, is more customer oriented than Amersham. But he didn’t deny that there is a “crying need” for customer service across the industry. What’s your take? It sounds like you’re reinventing your customer service.

We are and I think my own view is that we have pretty good customer service and customer focus, but I think every company has to be good at that. If you’re not, your customers will just walk away. The customers we sell to have a high need. They’re addressing complex issues. They’re all very smart people, smart enough to get help wherever they can get it from. They won’t initially think what is the cost of that. If they’re getting it apparently free, then that’s fine for them, but I think we’ve also got a duty to think about how, in a cost effective way, we give them that information.

Customer focus is very important, customer service is very important. But for the long-term health of the market, you’ve got to do it in a cost effective way. So it’s being customer focused efficiently that’s the important thing.


Coggins is talking about creating a new contract service division at PerkinElmer that would service any vendor’s instruments for pharma customers, even the MegaBACE. Does that to you sound like something that could fly?

If I’m a customer with a MegaBACE and it needs servicing, first of all I will probably have a service contract with Amersham which came as part of my warranty. I then have got to ask myself, “Would another company’s service engineers really have the spare parts in inventory, have the latest spare parts, really understand all of the diagnostic tools that go with that piece of equipment to know whether it’s a washer or a valve or a software problem.” Systems are what the name says: they’re systems, and they only work if the consumables, the software, and the hardware is tuned properly.

So, I can understand what Peter is saying and in certain parts of the market there are companies that tend to the low-end to service microscopes and pipettes and all those kinds of things. I think servicing high-end, complex, third-party pieces of equipment would be fairly costly because you’ve got to get access to those pieces of equipment, take them apart, and train your engineers across, in this case it would be ABI’s instruments, Amersham’s instruments, Beckman’s instruments. I just wonder what the cost to maintain that kind of know-how would be.


Considering that our readers are your customers, what would you tell them the Amersham mantra for the year is?

We’re going into our sales conferences on the 7th of February and customer focus will be a theme. But what we’re trying to do is make sure that through the organization we line up the resources that we’ve got to address the needs of our customers more effectively. We’ve got great opportunities for using our skills in manufacturing and R&D to get a lot more interactive with our customer base. So my message to the customers is that I know for them also the economic climate is difficult. We’re in this for the long term as they are, and I think we’ve all got to work through it together. And we’re all working in absolutely the best part of the economy to be in.


Are you cutting any special deals for customers that you believe are going to make it through the downturn but just don’t have cash right now to spend as much as they’d like to on a new instrument?

We haven’t done that, but since you question that, one of the conversations I had this morning was with Bill Castell (Amersham PLC’s chief executive), who is my boss ultimately, on leasing programs. [We discussed] how we can help our customers who perhaps didn’t have the cash today but who expected their budgets to open up in 2004. How could we help them with leasing arrangements that would be beneficial to them? We’ll help where we can.


The Scan

New Study Highlights Role of Genetics in ADHD

Researchers report in Nature Genetics on differences in genetic architecture between ADHD affecting children versus ADHD that persists into adulthood or is diagnosed in adults.

Study Highlights Pitfall of Large Gene Panels in Clinical Genomic Analysis

An analysis in Genetics in Medicine finds that as gene panels get larger, there is an increased chance of uncovering benign candidate variants.

Single-Cell Atlas of Drosophila Embryogenesis

A new paper in Science presents a single-cell atlas of fruit fly embryonic development over time.

Phage Cocktail Holds Promise for IBD

Researchers uncovered a combination phage therapy that targets Klebsiella pneumonia strains among individuals experiencing inflammatory bowel disease flare ups, as they report in Cell.