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As Second Target Date for Clontech Sale Looms, BD Remains Mum on Suitors

It has been eight months since Becton Dickinson put its Clontech business up for sale, and as a revised timeline for its sale edges closer, questions are being raised about why it is taking so long to find a buyer.

BD announced last October that it had put the Clontech reagent business on the block (see BioCommerce Week 10/7/2004). The Franklin Lakes, NJ-based firm retained Goldman Sachs to help find a buyer and said that it would take a $125 million pre-tax charge upon completing the sale of Clontech.

BD acquired Clontech for $201 million in 1999, amid a flurry of purchases by the medical devices and diagnostics firm. At the time of the acquisition, Deborah Nuff, then president of BD Biosciences, said Clontech added a complementary piece to the company's portfolio of immunology and cell biology products. Nuff left the company in March 2003, and was succeeded by Vincent Forlenza, who remains in that position today.

It has since become apparent that Clontech was not a proper fit with the firm's other businesses and did not fit BD's long-term plans.

A former manager at BD Biosciences who asked not to be named told BioCommerce Week, "I think Deb's thought was that by [buying] Clontech [BD would] be getting more into the molecular diagnostics side of the business. The only problem is, if you looked at BD's distribution strategy, it didn't make any sense because we only called on hospitals."

BD officials were unavailable for an interview, but a spokesperson told BioCommerce Week that the firm still intends to sell the business, and "the sale process is continuing. We still expect to announce something by the end of this quarter, or shortly thereafter."

BD has not disclosed how much it is seeking for Clontech or who possible suitors for the business might be. But the former BD manager questioned, "What do they have that's so unique that you would pay so-called premium pricing?"

He noted that the molecular diagnostics market is now segmented into basically the large, multibillion-dollar, multinational players and small start-ups. "All of the middle-sized companies that used to handle Clontech-type products are all gone," he said. "I imagine that without finding some entrepreneurs, who would want to pick it up? Why would Roche want it, why would Abbott want it, why would Bayer do it?"

Outside of the molecular diagnostics field, there are some molecular biology tools providers, namely Invitrogen and Harvard Bioscience, who have been rather acquisitive over the past few years. But Harvard Bioscience offers very little in the way of consumables along with its capital equipment, and company officials recently said that they were not likely to make any acquisitions in that segment of their business (see BioCommerce Week 06/09/2005).

Invitrogen, on the other hand, has rapidly continued adding pieces to its business. CFO David Hoffmeister said last week at the Pacific Growth Equities Life Science Growth Conference that Invitrogen could spend up to $500 million on acquisitions this year. But the firm is not disclosing whether or not it would be interested in buying Clontech.

Other than Invitrogen, Clontech's primary competitors include Qiagen and Stratagene.

BD had hoped to sell Clontech by the end of its fiscal 2005 second quarter, which ended nearly three months ago. William Tozzi, the firm's controller, recently told attendees of the Banc of America Securities Health Care Conference in Las Vegas that BD hopes to find a buyer for Clontech by late this quarter, but cautioned that it may take the rest of the year before the business is sold (see BioCommerce Week 5/26/2005).

Clontech provides research reagents and assay kits with applications for genomics, functional genomics, proteomics, and drug discovery. Major product brands include BD Atlas, BD Living Colors, BD Creator, BD Clontech, and BD Matchmaker. The sale of the business would effectively mean BD's exit from the molecular biology tools space.

The unit recently relinquished rights to sell cloning vectors for fluorescent proteins derived from the jellyfish Aequorea victoria. The decision not to renew its license left Invitrogen, which gained rights to the technology through its 2003 acquisition of PanVera, as the sole supplier of the vectors (see BioCommerce Week sister publication Cell-Based Assay News 03/15/2005). The market for fluorescent proteins is fairly significant, though BD and Invitrogen declined to provide an estimate of market size.

click for larger image

Since 1999, Clontech has brought in revenue of roughly $263 million, but its sales have steadily declined over the past few years (see chart). Clontech contributed $80 million in revenue for BD in 2001, $73 million in 2002, $64 million in 2003, and $60.5 million in fiscal 2004. The firm now reports the Clontech business as discontinued operations in its financial results, even though it remains operational and employs some 220 employees.

At the time the firm disclosed it was selling Clontech, it said that BD Biosciences would focus on its cell analysis, discovery labware, and new platforms of imaging and in vitro drug metabolism/toxicity testing. Last year, the firm strengthened its position in the cellular analysis market with the purchase of cell imaging firm Atto Bioscience for roughly $25 million.

Gene Vivino, vice president of strategic planning and portfolio management for BD's Bioscience business unit, told BioCommerce Week last October, "From purely a market perspective, we are focused on cell analysis, cell sorting, and now with the Atto acquisition, cell imaging. The molecular biology space just doesn't quite tie into [cellular analysis] like we would have liked it to. It's not the business we are focusing on" (see BioCommerce Week 10/7/2004).

BD has built a $4-billion-a-year business on the foundation of cellular analysis, starting with the introduction in 1973 of the FACS product line, the first commercially available fluorescence-activated cell sorter. Since then, the company has become a leader in flow cytometry instruments and reagents for both research and clinical markets. Included in the company's product line are flow cytometers and cell sorters, as well as applications and data management software, and a suite of reagents that allow users to analyze, isolate, and characterize immune cells from blood and tissue.

— Edward Winnick ([email protected])

BD Revenue Breakdown 2001-2004 (All figures in $ Millions)
Year
2001
2002
2003
2004
BD Total Revenues
3,754.3
3,960.4
4,463.5
4,934.7
BD Biosciences Revenues
592
572.6
633
722.9
Clontech Revenue
80
73
64
60.5
SOURCE: BD Annual Reports
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