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Molecular Dx, Cell Analysis Top Focus of 2005 M&A Activity Among BCW Index Companies

With a total of 22 mergers and acquisitions among BCW Index companies in 2005, customers and investors were offered a glimpse of where multi-platform tool providers see the industry headed in the coming years.

BCW Index firms spent at least $2.4 billion on acquisitions last year (see table), and the competitive landscape certainly shifted for both capital equipment manufacturers and companies concentrating on selling consumables. The M&A activity was driven largely by two firms — Qiagen and Invitrogen — which each acquired six businesses last year with an eye on expanding their molecular diagnostics and proteomics portfolios.

Also generating interest from multi-platform tool vendors is the cell-analysis market, into which Fisher Scientific, Invitrogen, and PerkinElmer have planted stakes.

Molecular Dx Focus for Invitrogen, Qiagen

Invitrogen kept up a steady purchasing pace throughout the year, starting with its acquisitions of Zymed and Dynal and finishing most recently with its purchase of Quantum Dot. The firm has been building its diagnostics business off of the acquisitions of Zymed and Dynal (see BioCommerce Week 1/13/2005 and 2/10/2005), which provided the firm with HLA typing and CISH (chromogenic in situ hybridization technology) pathology products. The Dynal acquisition provided Invitrogen with a magnetic bead technology that the firm expects will work well in molecular diagnostic applications.

The firm's plans for that field and for proteomics also were enhanced by its July acquisition of BioSource for $130 million (see BioCommerce Week 7/28/2005). Throughout the year, Invitrogen added to its portfolio a variety of technologies for nanotech applications, imaging and microscopy, cell separation and analysis, labeling and detection, bead-based separation, and antibodies.

The M&A activity was driven largely by two firms — Qiagen and Invitrogen — which each acquired six businesses last year with an eye on expanding their molecular diagnostics and proteomics portfolios.

Many of these recent additions have been placed together in the firm's new Enabling Technologies division as part of its realignment plan announced a month ago (see BioCommerce Week 12/8/2005). In an interview with BioCommerce Week at the time the realignment was announced, Invitrogen Chairman and CEO Greg Lucier cited molecular diagnostics as a field that would primarily be served by the technologies that have been placed together in the division.

He said, "We knew at the beginning of [2005] that we had a very aggressive acquisition program for the year, and at some point we were going to have to realign the company to fully absorb the capabilities we brought in."

M&A activity has been the key factor in Invitrogen's growth since Lucier assumed leadership of the firm in May 2003. Since that time, the firm has spent at least $1.3 billion to acquire 11 businesses, and the number of Invitrogen employees has grown 80 percent from roughly 2,800 to more than 5,000 today. In addition, Invitrogen's sales have grown by more than half from approximately $770 million annually to an estimated $1.2 billion in sales for full-year 2005.

Qiagen, a chief Invitrogen rival, particularly in the preanalytical tools space, also embarked on an aggressive growth strategy, loading its purchases up in the summer. Among its acquisitions were those of Tianwei Times and Shenzhen PG Biotech, which set a base for Qiagen in the emerging Chinese market (see BioCommerce Week 9/29/2005).

Although Qiagen is known for its preanalytical tools for upstream research applications, it also clearly has its eye on the molecular diagnostics market. Its $40 million acquisition of Artus in June provided the company with a key component — PCR-based assays — for its plans of operating in this market (see BioCommerce Week 6/2/2005).

By acquiring Artus, Qiagen has "taken a big pain out of the process, namely the integration of the pre-analytical and the analytical component," CEO Peer Schatz said in a conference call following the acquisition. He added, "Artus is something like an 'Intel Inside' in the molecular diagnostics industry. It has created a very strong position in the area of the design of [PCR-based] diagnostic assays."

Cell Analysis, RNAi Garner Attention

Cell analysis is another field that BCW Index firms appear to be eyeing as a potential growth area. In October, Invitrogen announced that it had acquired Quantum Dot and the BioPixels unit of BioCrystal for undisclosed sums, providing the firm with labeling and detection technologies that will add to the portfolio of its Molecular Probes unit and beef up its growing cell-analysis business (see BioCommerce Week 10/13/2005). Those acquisitions followed a co-marketing pact inked a month earlier between Invitrogen and PerkinElmer, under which Invitrogen will supply its Voltage Sensor Probes brand of ion channel reagents for use with PerkinElmer's CellLux fluorescence cellular screening platform.

Fisher Scientific, a newcomer to the BCW Index, also entered the field this year, acquiring high-content screening pioneer Cellomics for $49 million in August (see BioCommerce Week 9/15/2005).

Fisher could bolster its Cellomics business by playing up its RNAi position, which started growing after it acquired Dharmacon in February 2004 for $80 million. Dharmacon sells siRNA reagents and related products, and, lately, siRNA and HCS have gone hand in hand in research laboratories hoping to perform target ID and validation studies, as well as functional genomics research.The Dharmacon acquisition put Fisher in direct competition with BCW Index firms Invitrogen and Qiagen, as well as Sigma-Aldrich, which purchased RNAi firm Proligo earlier this year (see BioCommerce Week 2/24/2005).

Competition in the RNAi field would also come from Applied Biosystems, which announced in the final days of 2005 that it would acquire Ambion's research products division, providing ABI with entry into a market that it estimated at $500 million and growing annually at a rate of more than 10 percent (see feature in this week's issue). The acquisition is ABI's first in four years and reinforces the firm's commitment to grow beyond its base of DNA sequencing, mass spectrometry, and microarray businesses.

Divestitures to Fund Future Acquisitions

Agilent made two acquisitions in its life sciences business in 2005, expanding its microarray and bioinformatics capabilities. But the firm's M&A strategy is more likely to take shape within the next year or two as the company realizes billions of dollars in proceeds from the sale of its semiconductor business and other divestitures (see BioCommerce Week 8/18/2005). Company officials have said the life sciences field is an area in which it expects to expand through M&A activity.

Likewise, PerkinElmer said in October that it would use roughly $400 million in proceeds from the sale of two businesses to focus its efforts primarily on the health sciences market (see BioCommerce Week 10/13/2005). The divestitures of its aerospace business and semiconductor and fluid-testing businesses also will enable the company to repay its debt, which stood at $270 million at the time the divestitures were announced and has been the primary reason PerkinElmer has been relatively quiet on the acquisition front for the past few years.

Harvard Bioscience announced in August its intention to sell or divest its capital equipment business, including the struggling Genomic Solutions subsidiary (see BioCommerce Week 8/4/2005). Company officials said they would use proceeds from a sale to fund other acquisitions to bolster the firm's apparatus and instrumentation business.

— Edward Winnick ([email protected])

2005 Mergers & Acquisitions Among BCW Index Companies
Month Closed Acquirer Acquiree
December* Applied Biosystems Ambion's Research Products Division
$273 million
October Invitrogen Quantum Dot
September Qiagen Shenzhen PG Biotech
$14.5 million
August Fisher Scientific Cellomics
$49 million
Qiagen SuNyx
$1.6 million
LumiCyte assets
$16 million
July Agilent Scientific Software
Invitrogen BioSource
$130 million
June Qiagen Artus
$40 million
Tianwei Times
$2 million
Nextal Biotechnology
$9.7 million
Takara Bio Clontech
$60 million
May Thermo Electron Kendro Laboratory Products
$833.5 million
Invitrogen Caltag
$20 million
Becton Dickinson FFE Weber
April Invitrogen Dynal
$391 million
Beckman Coulter Agencourt
$140 million
Sigma-Aldrich Proligo
January Sigma-Aldrich JRH Biosciences
$370 million
Invitrogen Zymed
$60 million
Agilent Computational Biology
* Close pending
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