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Roche's Sequencing Sales Decline 15 Percent in Q1

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By Julia Karow

This article has been updated from a version posted April 15 to include comments from 454's CEO.

Sequencing sales for Roche's Applied Science business fell 15 percent, measured in local currencies, in the first quarter of 2010 compared to the same period last year, the pharma and diagnostics company reported last week.

The company's sequencing revenues come from its 454 Life Sciences business, which became part of Applied Science when Roche acquired the firm in 2007.

In an e-mail to In Sequence, 454 Life Sciences President and CEO Chris McLeod attributed the year-over-year quarterly decline to particularly strong sales in the prior-year quarter.

"Q1 2009 was the first full quarter after the launch of our long-read GS FLX Titanium series chemistry, which led to an increase in instrument placements," McLeod said. "The timing of launches significantly affects revenue streams, which makes a quarter-on-quarter comparison difficult."

He added that the observed decline was also the result of a "change in our business model." In particular, he said that revenues from the company's 454 Sequencing Service Center "decreased significantly as planned" due to the growth of service provider customers "and their ability to fulfill the global demand."

While instrument and service sales fell year over year, McLeod said that reagent revenue growth was in the "double digits" for the quarter.

Overall, Applied Science, which is part of Roche's diagnostics division, posted CHF 226 million ($214 million) in sales for the first quarter, up 19 percent in local currencies over the same period last year.

While sequencing declined, most other Applied Science businesses grew in the first quarter: qPCR and nucleic acid sample preparation sales — the largest part of Applied Science — increased 39 percent; sales for the Roche NimbleGen array business — the smallest contributor — also grew 39 percent; industrial sales rose 31 percent; and other sales decreased by an unspecified amount, all measured in local currencies.

The year-over-year decline in first-quarter sequencing revenues follows a year of stagnation: for full-year 2009, Applied Science reported flat overall sales for DNA sequencing systems, though sequencing reagent sales were up 26 percent.

According to Roche's 2009 business report, the 454 Genome Sequencer generated CHF 139 million in sales last year, placing it among its top-selling diagnostics and life science research products.

In its report, the company attributed the flat 2009 sequencing sales to "the economic downturn and the resulting decline in research funding, notably in the US," adding that "the US administration's 2009 stimulus package for biomedical research is expected to alleviate the situation in 2010."

The company also said this week that it will launch its 454 GS Junior sequencer globally in the second quarter, a slight delay compared to the 2009 business report, which mentions a first-quarter launch.

McLeod said that Roche 454 expects to see "a significant boost" in revenue from the launch of the GS Junior. He added that the company has seen "tremendous global interest" in the system and has received a "vast amount of orders" for it.

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