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Does ABI s Pledge to Invest in Sales Mean Help is on the Way for its Arrays?

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The latest round of layoffs at Applied Biosystems could ultimately end up helping the company's microarray division, according to company officials, who said that the restructuring includes plans to expand the sales and support team for its 1700 Chemiluminescence Microarray Analyzer over the next year.

Last month, ABI said it planned to reduce its workforce by 250 employees, or nearly 6 percent, before the end of the year, slicing positions from its R&D, marketing, and operations, as well as incurring a fourth-quarter charge of between $20 and $22 million for severence packages and shutting down some of its existing facilities.

However, while June 22 was a black day for R&D employees, Sophie Patel, an ABI spokesperson, said that the company plans to increase its sales presence in the North American market during its 2006 fiscal year. Patel declined to comment on specific product lines, but said that the number of sales people would be increased company-wide, including the microarray division.

"The reductions were part of a decision to rebalance resources and it was also driven by a sales force effectiveness analysis that was conducted [internally] over the last several months," explained Patel.

"The analysis essentially concluded that we had been under-resourced in our North American sales and field-support organization. Hence there is a decision to hire more personnel within sales coming up in our next fiscal year," she continued.

According to Jack Zhai, ABI's microarray product manager, the company has a "strong sales force for the 1700 system worldwide."

"We do direct sales, and don't have distributors for this system," he wrote in an e-mail to BioArray News.

Zhai said that ABI currently has a North American sales force of 10 people for microarray sales and support for the 1700 system.


"The analysis essentially concluded that we had been under-resourced in our North American sales and field support organization. Hence there is a decision to hire more personnel within sales coming up in our next fiscal year."

"This team also closely works with [ABI's] genetics systems and molecular biology sales force, for example, to sell the 1700 system with [the] TaqMan system as well as other products," Zhai added.

ABI also has direct sales and support in Europe, the Asia Pacific region, and Japan for the 1700 system.

Zhai declined to provide details on the company's plans for hiring additional microarray sales staff.

ABI's current team of 10 is comparable to the sales force at rival CombiMatrix. CombiMatrix's CEO told BioArray News in May that the company plans to increase its sales force from about 12 individuals to 20 by the end of the year to handle the North American and European markets.

A spokesperson at GE Healthcare, which sells CodeLink bioarrays, declined to reveal the number of personnel the company has in the field in North America. Numbers for Agilent Technologies and Affymetrix could not be obtained by press time.

According to Patel, ABI will be beefing up its sales force, along with other segments of the company.

"During our next fiscal year we are anticipating other areas including field sales and support, manufacturing, and advanced research," she said.

"It will affect us across the company."

ABI president Catherine Burzik said in a statement that the actions "will support higher sales over time" and "will improve operational efficiency."

Anemic Growth

Compared to some of its other offerings, ABI's microarray system does not appear to be its flagship product. The company more prominently advertises its TaqMan assays for gene expression and genotyping, as well as its real-time PCR assays, sales of which grew during the company's third quarter, which ended March 31.

The company posted a 1-percent increase in organic revenue for the quarter, driven by its DNA sequencing business, which increased year over year by 3 percent to $141 million, and RT-PCR, which grew 20 percent to $134 million (see BAN 4/26/05).

Still, year-over-year revenue from ABI's mass spectrometry segment declined 4 percent to $105 million, receipts from its core PCR and DNA-synthesis unit slid 1 percent to $50 million, and revenue from all other product lines, including its microarray division, fell 17 percent to $26 million.

The company also predicted that overall growth for fiscal 2005, which ended June 30, will be in the "low-single-digits" over fiscal 2004. The company said that receipts from its RT-PCR/applied genomics and mass spectrometry segments "were expected to increase" over fiscal 2004, while revenues from DNA sequencing, core PCR and DNA synthesis, and other product lines "were expected to decline."

Zhai did not comment on sales within the microarray division.

The firm will provide its outlook for fiscal 2006 on July 27, when it reports its FY 2005 results, according to Patel.

— Justin Petrone ([email protected])

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