PerkinElmer expects an “explosion” in the US in the screening of infants for metabolic diseases, a trend that it believes will not only drive double-digit revenue growth for its neonatal screening business in 2005, but also accelerate its proteomics business, executives said last week.
The company plans to stoke growth in those two areas in 2005 internally, with a planned 20 percent increase in research and development, targeting an overall spend of approximately $100 million for FY ‘05, and externally, through acquisitions and partnerships. Overall, the company spent $83 million on R&D in 2003, $86 million in 2002, and $80 million in 2001.
“We have the opportunity to accelerate growth by investing more heavily internally and externally in key platforms,” Greg Summe, PerkinElmer’s CEO, told analysts and investors during a conference call last week.
Summe listed genetic screening and proteomics, and digital medical imaging, as key technologies driving FY ‘05 revenue growth in what the company calls its “health medicine businesses.” The company will support those technologies with investment, and will be looking to make deals through partnerships or acquisitions.
“You will see us more aggressive on the business development front as well,” Summe said. “We are not targeting large acquisitions, but key technology extensions in our portfolio, as well, to round out the opportunities that we see.”
With 2004 not yet complete, the company has already begun delivering on this strategy, as it announced a collaboration with startup Procognia last week to enter a new market for array-based glycoprotein analysis (see story, below).
Organizationally, the company’s genetic screening and proteomics product lines are managed in its Life and Analytical Sciences segment.
PerkinElmer expects FY ‘05 genetic screening revenue to grow by 12 percent to 15 percent, compared to FY ‘04.
Revenue growth in its Life and Analytical Sciences segment is expected to be in the 4 percent to 6 percent range, compared to FY ‘04, boosted largely by genetic screening, and to a lesser extent by proteomics, the company said.
PerkinElmer said it expects its 2005 earnings per-share to grow from 18 to 24 percent to range from $1.05 to $1.10.
The focus on the top line comes after a two-year period where the company wrestled with its debt and its operational efficiency.
“In 2003 and 2004, we felt more of an imperative to get our debt levels in balance and our operating margin up to a more respectable level,” Summe said. “We now feel that we are there and that we can spend a little more money on R&D.”
In the fall, the US government announced that some 30 tests for metabolic disorders would serve as a target for a standard of care for newborns, said Neil Cook, PerkinElmer’s chief science officer and head of business development for the Life and Analytical Science business segment.
Presently, 90 percent of the states screen for 10 or fewer of these metabolic disorders, Cook said, but that is expected to expand quickly.
Summe said California and Texas are leaders in newborn screening, followed by Florida, and “a bunch of others at various stages of discussion,” he said.
“A number of states — six, seven, eight — are clearly moving in that direction,” Cook said. “The more states that go, the more states that will go. We expect almost all the states to follow in fairly short order. The political environment is very favorable.”
In November, California said it would use PerkinElmer’s tandem mass spectrometry system, reagent kits, and software in the state’s newborn screening program.
PerkinElmer in August received FDA clearance to market the NeoGram Amino Acids and Acylcarnitines Tandem Mass Spectrometry Kit, a system that analyzes more than 40 disease markers with a single blood sample.
A commercial NeoGram product line will become available in early 2005, the company said.
“We believe our NeoGram mass spectroscopy system will enable both the immediate requirements as well as the possible expansion of newborn testing for the future,” Summe said. “We believe that this technology will become the gold standard for neonatal screening.”
PerkinElmer sees a convergence — stemming from its newborn screening programs and its efforts in proteomics — producing protein biomarkers with potential application in predictive diagnosis for pre-term mothers and newborn infants. In this, the company is preparing to exploit an emerging market with products that combine both.
“Our initiatives are not limited to protein markers but will also include genetic predisposition markers,” said Neal. “We believe we are uniquely positioned to build on our existing platform.”
PerkinElmer’s proteomics business is built on internal efforts coupled with a number of strategic alliances. The company plans to use its internal development and its external partners to create proteomic product bundles.
“We won’t invent internally all the products,” said Summe.
“Our focus is on the application. We collaborate with small biotechs and embrace them within our product lines. We want to understand the application from a customer perspective and deliver the best solution,” he said.
“You are not going to own the IP in this space and you don’t want to try to own all of that. And, you don’t want to compete with the $30 billion that the NIH is putting out there for R&D. You just want to ride along with that.”
The company will also explore the application of its proteomics tools to surrogate markers and phenotypic proteomics for preclinical studies and pharmaceutical development, Cook said.
“We are looking at the maturation of protein science to real hard end-user applications,” said Cook. “The discovery tools for proteomics are maturing into having an impact on medicine.”
— Mo Krochmal ([email protected])