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Focusing on LAS Growth and Expansion, PerkinElmer Buys Out Share in Indian JV

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
 
PerkinElmer said last week that it has acquired the remaining interest in its joint venture, PerkinElmer India, from Labindia Instruments for an undisclosed sum.
 
The move is intended to provide PerkinElmer with greater control over its direction in the rapidly emerging biopharmaceutical, genetic testing, and environmental markets in India. The company also said it plans to open a new headquarters and a new technical support and applications center in Mumbai later this year.
 
PerkinElmer’s rivals in the research tools space also have expanded their operations in India in recent years in response to changes made in 2005 to India’s intellectual property laws and greater investments by the Indian government over the past few years in the biotechnology sector.
 
PerkinElmer India is a sales, service, and marketing branch aimed primarily at India’s biotechnology sector. The acquisition makes PerkinElmer India, which currently employs 170 people, a wholly owned PerkinElmer subsidiary.
 
Labindia has been a distributor of PerkinElmer products in India for about 25 years, and the firms launched the joint venture in 2004, a PerkinElmer spokesman told BioCommerce Week last week. PerkinElmer held 51 percent of the company, which had consolidated PerkinElmer’s previous network of dealers in the country.
 
“We’ve had what we consider to be pretty good success as part of that joint venture … and we reached a point where in order to get to the next stage of our growth we felt strongly that we needed to have a more direct presence in the country,” said the spokesman. “We had achieved enough in the way of critical mass of sales, so we decided that the timing was right,” he said, noting that Labindia agreed.
 
PerkinElmer does not publicly state its revenues for individual countries, but the firm includes revenues from India as part of its Asian sales. Those sales accounted for 19 percent of PerkinElmer’s total 2006 revenue of $1.55 billion.
 
PerkinElmer’s operations are split into two main divisions: Life and Analytical Sciences and Optoelectronics. The firm expects its LAS business to be the primary beneficiary of the switch to direct ownership of the subsidiary.
 
“The primary growth drivers are definitely in the LAS area, but the Optoelectronics potential is right now in the conception phase,” said the spokesman.
 
“Certainly, CROs in general, and the presence of major pharmaceutical companies there and their manufacturing operations bode well for us,” he said. “But beyond that, there are macroeconomic conditions that play well into our strategy. For example, the healthcare infrastructure really benefits both our genetic screening business and our environmental monitoring business as well, as they’re making some significant investments in environmental infrastructure.”
 
He said that the new Mumbai headquarters will open during the third quarter of this year and will be the center of the firm’s operations in India, but it “has the potential to extend beyond that. That’s to be determined, [and] looking at that is part of our long-term plans.”
 
PerkinElmer has undisclosed milestones that it will use to evaluate whether Mumbai becomes a regional center, said the spokesperson.
 
Meanwhile, PerkinElmer has plans to expand the number of sales people it employs in India. The spokesperson also noted that the people that were employed by the joint venture are transferring to the fully direct operation. “We’re not losing anybody, per se,” he said.
 
He also said the firm has plans to hire “a significant number of people” between the new Mumbai headquarters and the new applications center before the end of this year as well as beyond.
 
Though the applications center’s focus is on supporting customer projects, it will have the potential to do R&D work, but “that’s probably a later-stage effort,” he said.
 
Expanding in an Evolving Market
 
Several research-tool vendors have been expanding their operations in India over the past several years with an eye on the country’s fast-growing biopharmaceutical and contract research organization industries. In addition, the country offers relatively cheap labor and a steady stream of university graduates with degrees in information technology, engineering, and biosciences.
 
In 2005, the Indian government strengthened patent laws and devised a national strategy to support biotech development in the country. As more biotech companies have popped up in India, tool vendors have noted the revenue opportunities and have set up demonstration centers, sales offices, and manufacturing facilities.
 
Waters, a PerkinElmer competitor and partner in certain markets, established its wholly owned subsidiary, Waters India, in 1998. The firm has continued expanding in the country since then and still sees a growing market for its instruments, particularly among CROs that have set up shop in India.
 

“We’ve had what we consider to be pretty good success as part of that joint venture … and we reached a point where in order to get to the next stage of our growth we felt strongly that we needed to have a more direct presence in the country.”

Waters currently employs a couple of hundred employees in India, said Gene Cassis, Waters’ vice president of investor relations and worldwide business development. The firm’s operations in the country include sales, service, applications support, and demonstration centers, he told BioCommerce Week in an interview last week.
 
Cassis said that sales from India account for roughly 5 percent of the firm’s total revenue, which was $1.28 billion for full-year 2006. He said that pharmaceutical applications “make up the lion’s share” of Waters’ business in India.
 
“Our business there has been growing at a very fast rate, so our expectations are that we will continue to grow our organization there,” said Cassis. “As we move into more sophisticated products, we’ll probably have to bring in more expertise.”
 
A little over a year ago, Agilent broke ground on a 10-acre business campus near Manesar, Haryana, which Agilent hopes to complete building by 2008. At that groundbreaking ceremony, Agilent CEO Bill Sullivan said the firm would invest $25 million in India through 2008 (see BioCommerce Week 4/19/2006). At that time, Agilent planned to hire 800 staffers, mostly in R&D, at its facilities in Gurgaon, located outside New Delhi.
 
An Agilent spokesman said this week that the firm’s Indian headquarters and four other offices in and around Gurgaon will move to the campus once it is completed. This past November, Agilent also opened a demonstration facility for its research tools in Bangalore.
 
Agilent currently has more than 1,400 employees in India focused on sales, marketing, customer support, R&D, engineering services and support, and transaction processing.
 
Meanwhile Thermo Fisher Scientific started direct operations in India eight years ago and operates several offices throughout the country, according to a company spokesperson. The firm recently opened a new sales and demonstration center in Mumbai and considers India a high-growth area.
 
Targeting one of those revenue opportunities in the country, a couple of weeks ago Thermo Fisher announced a collaboration with MegaWare to provide an automated software solution for bioequivalence studies conducted at CROs in India (see BioCommerce Week 6/13/2007).

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