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Merged Genomic Solutions Launches Products, Stalls on Pre-Spotted Arrays

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Following its merger with Harvard Bioscience, Genomic Solutions is launching two new products and expanding its distribution networks, Jeff Williams, the company's chief executive officer, told BioArray News this week. However, the company is still undecided about the future of its pre-spotted microarray business, according to Williams.

The company manufactures and sells low- to medium-density pre-spotted microarrays under a license granted by Affymetrix in January 2001.

“Hopefully, we will have a decision early next year; we are still trying to sort things out,” Williams said in a telephone interview. Meantime, the com pany website returns an “under construction” page for those who click on that product line.

The two new products the company is launching include the UC4x4, a laser scanner with automated slide handling capability, which can process 80 slides at a time and sells for $100,000. The second product is the Hyb4, which will sell for $25,000 and is an extension of the company's automated hybridization line, Williams said.

These products add to the company's GeneTAC line Biochip System, which includes a library management system, bench-, table- and production microarraying systems, hybridization stations, scanners and analysis software. The company has an installed base of 200 microarraying machines, 300 hybridization stations and more than 100 scanners globally, Williams said.

The company also sells proteomics tools.

At the end of October, Genomic Solutions became part of Harvard Bioscience with the finalization of a $26 million cash-and-stock merger initiated last summer. The terms of the merger included a corporate restructuring where some 50 people were fired from Genomic Solutions to cut operating costs. Williams said the firm, which now has 120 employees in offices in Ann Arbor, the U.K. and Tokyo, has the resources to service the products it has sold and intends to sell in the future.

“We did not cut service people,” he said. “In fact, we added service people here and in Europe and Japan. The cuts were mainly in the area of activities that were forward looking — bringing a return in 2004 to 2006. We are concentrating on the here and now products like proteomics automation, DNA microarrays, and high-throughput screening.”

Harvard Bioscience sells reagents and lab supplies through its catalog and e-mail networks, and has subsidiaries in the UK, Germany, and Belgium as well as a distribution agreement with Amersham Biosciences. Genomic Solutions has developed a global sales force and has lined up distributors in Australia, Hong Kong, China, New Zealand, South Korea, and Taiwan. Additionally, the company has a non-exclusive global distribution agreement with PerkinElmer.

Genomic Solutions will continue to offer a “broad product portfolio” of DNA microarray products, Williams said. “We will continue to take care of all our customers' needs.... We are committed to them and the equipment.”

The company is adding distributors in Europe and Asia.

“We are enthusiastic about the international markets,” Williams said. “We have a real strong sales and marketing presence in the U.S. and Japan and [Harvard Bioscience] has a strong presence in Europe and a catalogue distributing vehicle.”

Genomic Solutions was started in December 1997 and went public in May 2000 after taking in some $40 million in venture capital investment. At the start of the year, the company announced austerity measures as it burned away its cash at a rate of $1.5 million a quarter. Then, last summer, as the Genomic Solutions stock price dipped below a dollar and NASDAQ initiated de-listing procedures, Harvard Bioscience stepped in with an offer of cash and stock

Williams told BioArray News then that a merger made business sense. He believes there is more to come. “This industry is going to face consolidation over the next several years,” he said. “There are several hundred life sciences tools companies and 50 alone are public. It's an attractive business for consolidation.”

Harvard Biosciences could become one of these consolidators, as the company has a strategy of growth by acquisition, Chane Graziano, Harvard Bioscience CEO, said in a conference call. He said Harvard Bioscience takes a loose reign in managing its acquisitions

“We then let them do what they want to do,” he said. “Fundamentally, I find it easier to find people that have the capability to run relatively small operations profitably. Provided they meet our profit goals and growth targets, of a minimum of 20 percent, I have no problem of letting them remain free-standing.”

Harvard Biosciences, in its third-quarter conference call, said Genomic Solutions is expected to contribute $20 million in revenue to the company's ledger in 2003 and $5 million in the fourth quarter of 2002.

Genomic Solutions will spend money mainly on sales and general administration expenses, at a 3-1 ratio over research and development.

“They have reduced the R&D expenses significantly from where it was,” said Graziano. “That's largely due to the fact that a lot of the investments they have been making in products have been introduced. I don't see the level or research projects continuing into the future.”

— MOK

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