Skip to main content
Premium Trial:

Request an Annual Quote

'Fully Completed' Restructuring Will Save Affy $25M Annually, Says CFO

Premium

This story has been updated to include comments from Affymetrix on the market for cytogenetic tools.

Affymetrix has transferred all its array production to Singapore, streamlined its distribution in the Americas, Europe, and Asia, and moved all reagent manufacturing to its new hub in Ohio, the company said this week.

According to Chief Financial Officer John Batty, the restructuring will save it about $25 million annually, though it could take three years before the company nets this gain: In its quarterly report filed with the US Securities and Exchange Commission last month, Affy said it has incurred $75 million in costs associated with restructuring since 2006.

Affy last year announced its plans to relocate its array manufacturing from its West Sacramento, Calif., manufacturing center to Singapore, where the firm began leasing a 150,000-foot-space in 2005 (see BAN 3/4/2008).

Speaking to investors and analysts at the Bank of America and Merrill Lynch Healthcare Conference in New York last week, Batty said the move to Singapore, where Affy has been given a 10-year tax holiday, was "fully completed" last quarter. "One-hundred percent of our arrays are being produced in our Singapore manufacturing facility, and the Sacramento facility has been shut down," he said.

Batty added that the Singapore facility is now compliant with International Standards Organization qualifications, and that, as of this week, Affy has produced more than 1 million arrays there.

Additionally, Affy, which is based in Santa Clara, Calif., has "fully operationalized" its US and Asian distribution centers. For US-bound products, "rather than distributing our products from our Sacramento facility, we've outsourced that to FedEx in Kentucky, so they are handling all of our distribution which, again, lowers our costs and improves our ability to respond to customer demands," Batty said.

Deliveries for Asia now originate from the Singapore plant, while European customers are served through Affy's office in Nijmegen, the Netherlands, he said.

Affy last week also completed consolidating its reagents-manufacturing operations to Cleveland. Affy paid $75 million for reagents maker USB last year and has since been relying more on USB, now called Affymetrix Ohio, to manufacture its reagent kits. That move has enabled Affy to stop hiring third-party providers, thus capturing more of its customers' spend (see BAN 1/8/2008).

A Cyto Opportunity

Separately, Batty said this week that Affy views the market for cytogenetic arrays as a "unique opportunity." The company launched the first version of its Cytogenetics Solution, based on its 1.8-million feature Human SNP 6.0 Array, last year (see BAN 3/25/2008).

In March, Affy debuted the second version of its cytogenetics offering, including its new Cytogenetics Whole-Genome 2.7M Array, a new reagents kit, and upgraded analysis software, the Chromosome Analysis Suite.

"This market is highly fragmented and looking for solutions," Batty said of the firm's opportunity. By playing in the cyto market, Affy must contend with rival packages from firms like Illumina, BlueGnome, and Oxford Gene Technology, as well as arrays manufactured by Agilent Technologies, which makes chips for cytogenetic services offered by Baylor College of Medicine, CombiMatrix Molecular Diagnostics, Quest Diagnostics, and Signature Genomic Laboratories.

According to Batty, the total market for cytogenetic tools — such as arrays, fluorescence in situ hybridization, molecular karyotyping, and others — is $2 billion and growing at a 17 percent annual compound growth rate. Batty made his comments at Deutsche Bank's Healthcare Conference, which was webcast from Boston.

Based on internal estimates and market reports, Affy estimates that $450 million is spent each year on cyto products for basic research, $550 million for prenatal and neonatal testing, $500 for cancer research, $100 million for drug discovery, and $400 million for other purposes.

Affy's products address the prenatal and neonatal testing and cancer research segments, valued at slightly more than $1 billion per year, according to the firm's estimates. Of that $1 billion market, though, only 12 percent, or $120 million, was being addressed by arrays in 2008, though Affy expects 20 percent of the market, or roughly $200 million, to be served by arrays by 2010.

According to Batty, 40 percent of Affy's target cytogenetic customers are academic labs, 20 percent are hospital and clinical labs, and the remaining 35 percent are large diagnostic service providers, such as Laboratory Corporation of America, an Affy customer.

He said that the market is being driven by a need to replace older, more time-consuming and therefore more expensive technologies, such as karyotyping and FISH.

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.