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Invitrogen Launches First Low-Cost Instruments; Portfolio Review on Track to Wrap Up This Year

Following years of speculation in the marketplace on when Invitrogen would reach beyond chemistry and service offerings and enter the instrument space, the firm this week launched the first two products in a planned series of low-cost, benchtop instruments.
 
Chairman and CEO Greg Lucier, speaking at the UBS Global Life Sciences Conference in New York this week, also said that the firm’s portfolio review, which could lead to some divestitures, is on track to be completed by the end of the year.
 
The launch of its lower-end instruments — the iBlot Dry Blotting system and iPrep purification instrument — had been highly anticipated since Invitrogen said earlier this year that it planned to develop “consumable” instruments.
 
While the launches mark a new era for the firm, Invitrogen is not likely to get involved in developing or selling larger, more expensive instrumentation anytime in the near future, Lucier said at the conference.
 
The instruments build off of reagents and chemistries Invitrogen already develops and sells out of its BioDiscovery business segment. The iBlot transfers proteins from polyacrylamide gels to nitrocellulose membranes in preparation for downstream analysis, while the iPrep automates nucleic acid purification using Invitrogen’s ChargeSwitch technology.
 
Earlier this year at the JPMorgan Healthcare Conference, Lucier had announced Invitrogen’s plan to develop instruments that would be based on the "unique abilities" of the firm's reagents (see BioCommerce Week 1/11/2006). Specifically, he cited the technology offered by its Quantum Dot division as a possible base for development of such instruments.
 
Lucier said at the time that the goal is to develop hardware that would be considered "consumable" and could be disposed of after a short period of use — which would disqualify capital equipment such as mass spec and liquid chromatography.
 
“We had told investors a year ago that what we were going to do was start investing in engineering teams to start developing desktop, lower-priced instruments — gadgets, if you will — that help do a lot of work at the bench side,” said Lucier during the firm’s breakout session at the UBS conference this week.
 
He said the iBlot and iPrep are the first of several of these types of instruments the firm plans to commercialize, though he did not provide a timeline for future introductions. Responding to a question about pricing, Lucier said the iBlot would sell for around $700.
 
“It enables you to do a Western [blot] now … in several minutes,” he said. “It can only use our reagents, [and] it really is a nice, easy consumable for the client.”
 
Lucier made clear that Invitrogen intends to stick with lower-cost, small instruments. “We don’t want to get into these very expensive instruments that change the overall gross margins and purchasing demands of our company,” he said. “But we very much want to invest in instruments or gadgets that consume reagents and really make it easier for researchers to get their work done a lot faster.”
 
Ongoing Portfolio Review
 
During the firm’s breakout session, Lucier was asked several questions about the firm’s ongoing portfolio review. He said Invitrogen was on track to complete the review by the end of the year and suggested that divestitures would likely come after that.
 
“We’re not talking about huge chunks of the business, let me make that clear,” said Lucier. “We’re talking about small pieces of revenue, overall, when you look at the portfolio.”
 
He said the firm was looking to keep pieces of the business that are differentiated by science and have higher margins.
 
For example, he said the diagnostics business of BioSource is under review and the firm is trying to decide whether it wants to hold on to that particular piece of the business. Invitrogen acquired BioSource in July 2005 for $130 million in cash (see BioCommerce Week 7/28/2005).
 

“We’re not talking about huge chunks of the business, let me make that clear. We’re talking about small pieces of revenue, overall, when you look at the portfolio.”

Following the release of its second quarter results this past summer, Invitrogen officials said they were reviewing the firm’s entire portfolio with a particular focus on the sera business, which experienced a sharp decline during the quarter (see BioCommerce Week 8/9/2006).
 
At the time, Lucier said the firm is reviewing whether “we need to be broadly in the sera business” and hopes to know more in six months. The sera business brings in more than $100 million in annual sales, or around 12 percent of the company’s total revenue last year, so it is not an insignificant piece of Invitrogen’s overall business.
 
But it’s not just the sera business that is under review. Following a year in which Invitrogen spent nearly $650 million acquiring eight companies, the firm has made only a single buy this year — the recent $25.9-million acquisition of Sentigen (see BioCommerce Week 9/6/2006). Digesting those earlier purchases has come with the usual challenges, they said.
 
“In the last three years, we’ve made a number of acquisitions,” Lucier said at the conference this week. “Most have actually been very positive, and we’ll learn from the ones that haven’t turned out as well as we thought. The key for us is management is not going to let it paralyze us. You’ve got to learn from it and keep growing, and that’s what we’re trying to do.”

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