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In 'Soft' Array Market, Agilent Hangs on to CGH Business, But Loses Ground in Expression

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This story was originally posted on Nov. 17.

By Justin Petrone

Agilent Technologies continues to see demand for its comparative genomic hybridization arrays, but the vendor's expression-array sales are declining as more customers move to next-generation sequencing, according to a company official.

Nick Roelofs, Agilent's president of the Life Sciences group, said this week that the array market in general is "very soft." He said that the Santa Clara, Calif.-based company is "doing fine in [regards to] specific cytogenetic CGH utilization," but that the gene expression market is "rapidly being cannibalized by sequencing."

Roelofs noted that the movement in the expression market to sequencing from arrays is "not new to Agilent," and that the firm is "not surprised" by the trend. He added that the company has "always been weak" in the expression array market, in which it competes with rivals like Affymetrix, Illumina, and Roche NimbleGen.

But even market leaders like Affy are feeling the pinch. The company reported earlier this month that its RNA business, which consists mainly of its gene expression microarrays, plummeted 22 percent in Q3 — to $20.9 million from $36.9 million in the prior-year period — largely due to pressure from next-generation sequencing as well as a constrained funding environment (BAN 11/8/2011).

On the CGH side, Agilent continues to manufacture chips for a number of companies that offer cytogenomic arrays and services and supply cytogeneticists with arrays for research use. Its clients include Oxford Gene Technology, BlueGnome, and CombiMatrix Molecular Diagnostics, among others.

Agilent also continues to introduce new products for array CGH. For instance, it recently launched its SurePrint G3 CGH+SNP cancer catalog arrays, based on designs by the Cancer Cytogenomics Microarray Consortium (BAN 10/11/2011). And last year, it debuted CGH+SNP arrays designed to identify constitutional abnormalities (BAN 9/14/2010).

Roelofs discussed Agilent's array business during the firm's fiscal fourth quarter earnings call this week. The company reported that for the three months ended Oct. 31, revenues increased 9 percent, to $1.73 billion from $1.58 billion.

Life Sciences revenues, likewise, rose 9 percent, to $471 million from $431 million year over year, led by demand in the applied markets, CEO Bill Sullivan said during the call. Within the segment, sales to pharmaceutical firms grew 5 percent, while sales to academic and government-funded researchers rose 4 percent.

Roelofs said that worldwide, sales to academics and government-funded researchers continue to be a "pretty healthy mid-single-digit market." He noted the firm experienced particular strength in the emerging markets, such as India and China, where companywide sales surged 30 percent in both countries during the quarter, year over year.

By comparison, he said that sales to government-funded researchers in the US are "a real problem" as the National Science Foundation budget is down about 2.4 percent. However, he said, the National Institutes of Health budget looks like it will be slightly up.

Diminished federal funding in the US has also hit Agilent's rivals. Last month, Illumina, for example, partially blamed an uncertain government-funding environment for a 9 percent decline in array sales (BAN 10/25/2011).

Still, Roelofs said this effect was "minimal" on Agilent's Life Sciences business during the quarter.

In Agilent's other segments, Chemical Analyses revenues rose 4 percent, to $405 million from $389 million a year ago, and Electronic Measurement revenues climbed 12 percent, to $855 million from $764 million.

Companywide R&D spending in the quarter increased 3 percent, to $163 million from $159 million a year ago, while SG&A costs fell 6 percent year over year, to $445 million from $472 million.

Net income for the fourth quarter dipped 1 percent, to $289 million from $292 million a year ago.

For full-year 2011, revenues jumped 22 percent, to $6.62 billion from $5.44 billion; R&D spending rose 6 percent, to $649 million from $612 million; and SG&A costs increased 3 percent, to $1.81 billion from $1.75 billion.

Profits for the year increased 47 percent, to $1.01 billion from $684 million a year ago.

The company finished the year with $3.53 billion in cash and cash equivalents.


Have topics you'd like to see covered in BioArray News? Contact the editor at jpetrone [at] genomeweb [.] com

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