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Growing at 3-Percent Pace, Molecular Tools Firms Target $24 Billion 04 Sales

The 15 companies of the three-month-old BioCommerce Week Index so far have recorded $18.5 billion in molecular biology tool sales for fiscal year 2004, compared to $23.7 billion in sales for all of FY ‘03 and should be on track to record at least another $24 billion in sales for this year — an increase of less than 3 percent.

The most recent sales figures — reported during the first 12 weeks of the index coverage — clearly indicate a growing market sector, but what is different from last year is the entrance into this market of General Electric Healthcare, which posted $9.3 billion in revenues through the first three quarters of 2004.

The $23.7 billion sales figures for the BCW Index companies in FY ‘03 includes GE Medical Systems revenues as well as revenues from Amersham, which was acquired by GE in April. Sales results are limited to those company segments that specifically address the molecular biology tools market.

The BCW Index is a select group of multiplatform molecular biology tools vendors that includes: Agilent Technologies, Applied Biosystems, Becton Dickinson, Beckman Coulter, Bio-Rad Laboratories, Bruker Biosciences, GE Healthcare, Harvard Bioscience, Invitrogen, Molecular Devices, PerkinElmer, Sigma-Aldrich, Stratagene, Thermo Electron, and Waters. The index debuted on Sept. 9 (see BCW 9/9/2004,) to serve as a yardstick to measure growth in the molecular biology tools market.

This group of multiplatform molecular biology tools companies represents a sector that in the economically depressed environment of 2003 grew 9 percent year-over-year compared to FY 2002 and may be poised to record single-digit growth for FY ‘04. (See chart, page 4)

In the first three months since Sept. 9 that the BCW Index has tracked the performance of this sector, the share-price average of the companies has gained 9 percent, beating the S&P 500 index, which grew 6 percent in the same period. (See BCW 11/25/04).

The final tally on FY ‘04 won’t be available until the last of the 15 companies report fourth-quarter results sometime after the new year. But with three companies already wrapping up their 2004 fiscal years, the BCW Index companies have recorded $18.5 billion in revenues so far in 2004.

The three BCW companies completing Fiscal ‘04 — Agilent Technologies, Applied Biosystems, and BD Biosciences — all grew, with Agilent’s Life Sciences and Chemical Analysis group growing 12 percent year-over-year followed by BD’s biosciences division growing at 10 percent, and ABI with 3 percent growth.

If the BCW group matches last year’s Q4 sales, it is in line for at least another $5.7 billion in revenues for a total sales of $24.2 billion and 3 percent year-over-year growth.

Making Room For GE

When General Electric acquired Amersham in April for $10.3 billion (see BCW 10/7/2004), the molecular biology tools market changed. Amersham’s product lines merged with those of GE Healthcare to create a diverse lineup of technologies applicable at all points along the molecular biology tools continuum — from academia to the clinic — and even expanding the marketplace to include imaging alongside the comparative fast-growth ‘omics toolkit: microarrays, DNA sequencers, and mass spectrometers. This week, GE is rolling out its strategy for its Healthcare business with a large presence at the 2004 Radiological Society of North America conference in Chicago, and later, before investors in that city. (See story, p. 1).

GE Healthcare through the first nine months of the year reported $9.3 billion in sales, and got a $650 million boost toward its $3.4 billion in Q3 ‘04 revenues from Amersham’s first quarter on its ledgers (see BCW 10/7/2004).

In the BCW billion-dollar revenues club for the 2004 fiscal year are: Applied Biosystems with $1.7 billion in sales, with 3.5 percent growth over $1.68 billion in FY ‘03; Agilent Technologies’ Life Sciences and Chemical Analytical unit, which posted $1.3 billion in sales for FY ‘04, up 12 percent over $1.2 billion in ‘03. Thermo Electron, which has not yet reported its Q4 results, but has already recorded $1.6 billion in revenues for its first three quarters of FY ‘04. Thermo, which reported $583 million in sales in Q4 ‘03, needs $448 million to match its FY ‘03 revenues of $2.1 billion.

Poised to join the $1 billion sales grouping with one quarter remaining in their fiscal years are: Invitrogen with $761 million reported so far; PerkinElmer’s Life and Analytical Sciences unit with $751 million; and Waters with $780 million in revenues.

Invitrogen, reporting $208 million in Q4 ‘03 sales, is $17 million from reaching its FY ‘03 sales totals. PerkinElmer’s LAS unit, with sales of $290 million in Q4 ‘03, stands $252 million away from matching its 2003 sales numbers. Waters, with $275 million in Q4 ‘03, needs $178 million to repeat its 2003 total sales.

Becton Dickinson, which reported its fourth-quarter earnings on Nov. 4, posted $770 million in revenues for its biosciences unit. Although the unit didn’t hit the $1 billion milestone, it posted an 11-percent improvement over sales of $697 million in FY ‘03.

Beckman Coulter’s biomedical research division needs $172 million in Q4 FY ‘04 to reach its FY ‘03 sales. The unit had sales of $135 million in Q4 FY ‘03.

Bio-Rad’s life-sciences business segment, with $130 million in Q4 ‘03 sales, is $120 million from reaching its FY ‘03 total sales.

At the end of the quarter ending Sept. 30, two of the smaller companies in the index recorded double-digit sequential growth in sales compared to the previous period.

Molecular Devices recorded 30 percent growth with sales of $41.5 million for its third quarter of FY ‘04, compared to $32 million for the previous quarter. Growth in the quarter was driven from the company’s acquisition of Axon Instruments, which closed in July (see BCW 11/4/2004). MDCC, which had Q4 ‘03 revenues of $33 million, will need to post $15.5 million in the fourth quarter of ‘04 to meet its FY ‘03 revenues of $116 million.

Stratagene, which became a public company with the acquisition of Hycor on July 24, 2003, reported total sales of $23 million in Q3 ‘04, a 17-percent sequential gain over $19.7 million for Q2 ‘04. The company, which reported revenues of $87 million in FY ‘03, is $25 million away from matching that.

Sigma-Aldrich’s biotechnology business unit, reporting $72.5 million in revenues in Q4 ‘03, needs $58 million in Q4 ‘04 to match FY ‘03 revenue of $294 million.

Harvard Biosciences, despite integration issues with its Genomic Solutions unit, is $20 million from matching its $87 million in revenues for FY ‘03. HBIO had $24 million in revenues in FY ‘03.

— Mo Krochmal ([email protected])

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