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Amersham s Integration Into General Electric Going Well, While Keeping CEO Immelt Busy

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Amersham is bringing good things to General Electric, at least as far as the financial report for the second quarter of FY 2004, GE's first reporting period to include the acquired UK-based company.

Last week, GE reported $3.9 billion in earnings for the period, in which it: closed on the Amersham acquisition; completed the merger of NBC and Universal; as well as floated an initial public offering of its insurance unit Genworth Financial.

In the year-ago quarter, before the purchase of Amersham, GE reported $3.8 billion in earnings for its second quarter. Overall, GE revenues were $37 billion, compared to $33.4 billion for the year-ago quarter.

GE acquired Amersham in a $10.3 billion transaction that closed on April 8. Amersham is being integrated into GE and will eventually do business as GE Healthcare, which will become the only one of the conglomerate's 11 businesses headquartered outside of the United States, combining GE's healthcare technology business with Amersham.

For the quarter, the entire entity of GE Healthcare had orders of $3.5 billion; excluding Amersham, orders were $2.9 billion. The unit had revenues of $3.4 billion, compared to $2.4 million for the year-ago quarter. Amersham had ô27 million ($795 million) in sales during the second quarter of 2003.

With its purchase of Amersham, General Electric also acquired the CodeLink line of microarrays, which is manufactured under the Amersham Biosciences banner from a Chandler, Ariz.-based manufacturing facility (see BAN 6/2/2004).

GE declined a BioArray News request for comment on progress within the CodeLink unit, which has yet to release a product under its new ownership (see BAN 4/14/2004).

In a conference call with financial analysts last week, Jeffrey Immelt, the chairman of General Electric, said the integration of Amersham is "going well."

"This is an area that clearly I'm spending a lot of time on," he said. "The biosciences business is exceeding expectations."

Immelt said General Electric has created a unified sales force to sell to the pharmaceutical industry and it has linked GE's service business with proteins separations and other Amersham businesses to "improve service operations" as well as taking other steps.

"We have combined strategic accounts and now have nine technology programs that combine the best of Amersham and GE to offer to customers over the next 12 months," he said. "We love the way the business is operating and it will continue to drive good results. The deals are done, and are performing well and we are focused on executing. The second quarter was an important point for the company. This sets the framework going forward."

The company reported a $40 million charge for the amortization of intangibles and integration expenses from the Amersham deal in the quarter. The write-off of in-process research and development and a fair-market value for inventory amounted to $163 million, said Keith Sherin, co-CFO for GE. He said integration-related expenses for the deal for the remainder of the year and for next year would be nominal.

"We're on track here to basically have these teams fully integrated," he said. He didn't provide a target date for the completion of the integration.

In the period, Amersham contributed some $680 million in revenues and $130 million of operating profit, GE said.

The impact of all of GE's dealing amounted to a 1-cent reduction in earnings for the company, which had earnings of 38 cents a share for the period, said Bill Cary, the company's vice president of investor communications.

CodeLink customer Scott Magnuson, president and founder of GenUS Biosystems, an almost two-year-old Chicago-based firm offering gene-expression profiling services using the CodeLink platform, said he sees no changes in CodeLink since the acquisition closed.

"It seems like a pretty seamless transition," Magnuson told BioArray News this week. "We have seen a pretty big push from them to become a bigger player. They don't seem to be laying back."

Magnuson previously was head of genomics and bioinformatics for Motorola Life Sciences, and before that, a senior scientist at Abbott. After Motorola sold the CodeLink line, Magnuson opted not to relocate with the product line to Arizona, but instead opened a microarray-services business with two partners (see BAN 9/2/2003). Today, the firm has seven employees.

Magnuson said his company is seeing a wide array of customers for the CodeLink services GenUS offers.

"They are all over the board, from academia, pharma, and biotechs," he said. "After a year or so into this, there is no set pattern in terms of outsourcing."

General Electric Dealing With Applera

This week, GE's Global Research unit announced a deal with Applera's Celera Genomics and Celera Diagnostics, a Celera Genomics-Applied Biosystems joint venture, in a research collaboration to develop imaging agents for cancers that selectively target cell surface proteins that Celera Genomics has found to be associated with malignancies.

The deal is intriguing because it combines the unit that conducts research for the entire GE organization with a collaboration that includes Applera's Applied Biosystems unit, which has just released a microarray platform that will compete with the CodeLink line (see BAN 5/5/2004).

"We don't see a conflict," a GE research spokesman told BioArray News, "this is a research-specific collaboration"

GE, Celera Genomics, and Celera Diagnostics have also established a second project under their collaboration that focuses on the development of new algorithms and tools that advance the diagnostics and/or therapeutic programs of each company. New project agreements related to other disease areas, or tools that help create enabling technology and products may be added in the future, GE said in a statement. Additional terms of the joint research collaboration were not disclosed.

--MOK

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