Skip to main content
Premium Trial:

Request an Annual Quote

ABI Optimistic But Vague on Growth Prospects for its Microarray Business

Premium

Despite rolling out several new gene expression arrays and a new microarray instrument over the past year, Applied Biosystems in its fiscal year-end conference call provided few clues of its expectations for these products over the next year.

The firm last week reported relatively flat earnings for the 2004 fiscal year and said it is looking toward strong growth in its mass spectrometry and applied genomics products units, but company officials yielded little information on its efforts to capture market share specifically in the microarray sector.

Applied Biosystems President Michael Hunkapiller noted in a conference call following the release of its fourth-quarter and year-end results, “In gene expression, we now offer assays for nearly all human, mouse, and rat genes and splice variants. We also began unrestricted commercial sales of the Applied Biosystems mouse genome survey microarray for use with the recently introduced Expression Array system.”

When asked during the call how sales were going for the new gene expression system, Cathy Burzik, Applied Biosystems COO, said, “We’re about one quarter now into the overall selling of the product, and I’d say the product is rolling out consistent with what our expectations have been. We are working with our very early trial sites … to produce publications, which we would expect to start coming forward from a biological comparison perspective over the course of the next couple of quarters.”

Pressed further about fiscal 2004 sales and expectations for its microarray business, a company spokesperson declined to provide further details and said, “Applied Biosystems does not break out specific product sales.”

Applied Biosystems has touted the advantages of its Expression Array System, saying it offers well-defined and longer probe lengths coupled with chemiluminescent technology that allows detection of more genes while using less starting sample. The firm also said it has made the transition from global expression profiling on microarrays to the examination of a more focused set of candidate genes using its TaqMan assays more efficient and productive for researchers.

Upon launching the Expression Array System in April, company officials voiced optimism for sales of the new product, pointing to the queue of customers it had lined up for sample analysis demos on the platform.

But some industry observers question how it will compete in a crowded field that is dominated by Santa Clara, Calif.-based Affymetrix, which owns, by some accounts, 80 percent of the microarray field, as well as several other array manufacturers including Palo Alto, Calif.-based Agilent and UK-based Amersham Biosciences (now part of GE).

SG Cowen analyst Eric Schmidt told BioArray News that it would be tough for Applied Biosystems to make strong gains in market share. “It’s not only Affy. There are other players in this marketplace that are making it more competitive. I haven’t heard great things yet about the ABI system [and] my expectations are not particularly high for ABI in that market.”

However, Schmidt pointed out that other parts of ABI’s business have been doing well. “The mass spec business unit has been growing at a good clip, certainly double digits for the last few years. And the applied genomics business has also been growing at a double-digit clip,” he said.

The Foster City, Calif.-based firm a few weeks ago announced a restructuring that will involve cutting 145 jobs — about 3.5 percent of its 4,400-person workforce — and divide the company into four new divisions: Molecular biology; proteomics and small molecules; applied markets; and service. ABI’s microarray business will fall under its molecular biology unit.

Burzik said during the conference call that the restructuring “and further changes should enable us to move, after fiscal 2005, toward achieving higher single-digit organic revenue growth. We are presently conducting the next phase of our strategic and operational review. During this phase, we will be seeking to identify and analyze addi-tional internal and external growth opportunities, including potential acquisitions aimed at further increasing Applied Biosystems’ revenue growth rate.”

Company officials declined to comment on whether it would seek acquisitions to bolster its microarray business.

2004 Revenues Grow 6 Percent

The firm reported a 6 percent increase in revenues to $460.5 million for the fourth quarter, with sales of its instruments growing to $231.2 million from $215.3 million in the fourth quarter last year. Revenues increased in both its mass spectrometry product category and its real-time PCR/other applied genomics product category, but decreased in its DNA sequencing and other product lines.

For full-year fiscal 2004, Applied Biosystems had revenues of $1.74 billion, up 3 percent on its fiscal 2003 revenues of $1.68 billion. Instrument sales were up 1 percent to $841 million, while revenues from consumables climbed 6 percent to $609.2 million.

The firm’s net income for fiscal 2004 was $182.9 million, or $.83 per share, which included an after-tax benefit of $10.6 million related to discontinued operations. Its net income for fiscal 2003 was $183.2 million, or $.95 per share, which included a $16.4 million after-tax loss from discontinued operations.

Applied Biosystems has pre-dicted low- to mid-single digit revenue growth for fiscal 2005, and expects revenues to increase for its products used in mass spectrometry and functional genomics. The firm expects overall revenues from its DNA sequencing products to continue to decline, but anticipates that revenues from customers who are not affiliated with the large genome centers will increase modestly.

— EW

The Scan

More Boosters for US

Following US Food and Drug Administration authorization, the Centers for Disease Control and Prevention has endorsed booster doses of the Moderna and Johnson & Johnson SARS-CoV-2 vaccines, the Washington Post writes.

From a Pig

A genetically modified pig kidney was transplanted into a human without triggering an immune response, Reuters reports.

For Privacy's Sake

Wired reports that more US states are passing genetic privacy laws.

Science Paper on How Poaching Drove Evolution in African Elephants

In Science this week: poaching has led to the rapid evolution of tuskless African elephants.