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Beckman Coulter to Shutter Cell Imaging Center; Future of HCS Platform in Doubt


Beckman Coulter plans to close its San Diego-based Cell Analysis and Development Center as part of a recently announced reorganization, according to sources close to the situation. The center houses R&D and service for the IC 100 high-content screening technology Beckman acquired along with startup Q3DM in late 2003.

As part of the closing, most of the employees in the cell-imaging and -analysis division have already been laid off, according to two former Beckman officials, and the future of the high-content screening platform is in question. The step removes Beckman as a player in the rapidly growing cellular imaging space as it will "no longer market" the IC 100 instrument, a Beckman spokesperson confirmed this week. She added that the company "will support existing customers of the system and continue to look for other applications for this technology."

Beckman will jettison the technology less than two years after it acquired it to keep up with other multi-tool biotech vendors such as Becton-Dickinson, Molecular Devices, and GE Healthcare, each of which had acquired their own high-content screening platforms around the same time or in the prior year.

"It's tremendously disappointing to … the people that were on the team," said one former cell imaging and analysis official who asked to remain anonymous because of Beckman's status as a publicly traded company. "In certain respects, our software is recognized as market-leading. It's always debatable how valuable instrumentation is, [but] we had, I think, superior instrumentation in many respects.

"It's tremendously disappointing to … the people that were on the team. In certain respects, our software is recognized as market-leading. It's always debatable how valuable instrumentation is, [but] we had, I think, superior instrumentation in many respects."

"But clearly, people responded to our software and our whole plug-in architecture," added the former official. "But the way that Beckman handled this, they basically decided to not be in the business, laid everybody off except one person, who is sort of helping support customers while they clean up the mess, and didn't give [the former Q3DM employees] an opportunity to go out and find another home for it."

What happens to the technology now is uncertain as Beckman doesn't actually own the rights to it, sources confirmed. As a result, the original stakeholders of Q3DM are left wondering if there is a future for the automated microscopy platform, which was known as the EIDAQ 100 before Beckman acquired Q3DM.

The Beckman spokesperson said Beckman "owns certain aspects of the technology and has a sole and exclusive license to the remainder."

The source also claimed that Beckman has "given the impression" that it will get rid of the technology completely. "That's the impression that they've created, but they haven't really told us what they're going to do," said former official. "They don't own the underlying technology — Q3DM [does] — and since it hadn't been completely paid for, I think there is a discussion that I would expect Beckman to have with Q3DM. I don't know if that's been had or not."

The Beckman spokesperson added that the closure will not take Beckman out of the cellular-analysis game completely because the company "operates in many segments" of the market, "including hematology and flow cytometry, with related applications with sales over $800 million."

Beckman said in its third-quarter earnings release earlier this month that it would "close at least three facilities, sell two parcels of real estate, harvest or discontinue mature product lines," reduce 350 positions — or 3 percent of its workforce — and streamline the company's physical distribution (see CBA News, 11/7/2005). The number of cell-analysis staffers affected by the lay-offs is unclear because Beckman does not break down employees by business group. However, the spokesperson confirmed that former Q3DM employees "were impacted" by the restructuring, "as were many areas of the company worldwide."

The company hinted at these plans in July when it told investors it would restructure the company and shift its sales focus to leasing instrumentation rather than pursuing big-ticket purchases.

Beckman had also said it would review "minor product lines, facilities, and other assets that do not support the one-company strategy," which could result in divestitures. "We will be reviewing especially the mature product lines, where our choices would most likely be harvest or shut down and possibly divestiture," Beckman Coulter President and CEO Scott Garrett said at the time. "If there is a valuable cash flow associated with them, a harvest strategy may be appropriate, and if in fact we identify a business that is going to be sustainable but not strategic, we would consider it for divestiture."

Earlier this month, Garrett said in a statement that he expects the lay-offs will result in a benefit of up to $2 million in the fourth quarter, as well as "$15 million of annual savings in 2006, growing to $20 million of annual savings in 2007 and beyond." Beckman does not break out revenues for its divisions.

"Imaging simply is not on the short list of investment opportunities they felt would deliver the best returns."

According to an e-mail sent to CBA News from the former Beckman official, the company "determined the best way for [it] to increase its annual growth rate was to first review its strategic plans and initiatives and then bring all new market and product investments into alignment with this reformulated strategy. Imaging simply is not on the short list of investment opportunities they felt would deliver the best returns."

The former official also indicated that it likely wasn't a problem with the platform that made Beckman change its mind, and also made it clear that he doesn't have an axe to grind with Beckman.

"I don't think that there is any question about the potential success for the product line," the former official said. "But I don't think that really entered into it. I think Beckman had to rationalize, go through every business that it's in, and say, 'Where are we going to play to win? Let's not dabble.'

"And I applaud them for that," he added. He said Garrett "has to do that, and I applaud him for stepping up and causing the management team to go through that exercise. Presumably in the long run, that's going to help Beckman achieve a higher growth rate. So you can't find fault with that process."

"There is a management team that is interested in taking this forward, and if there are interested parties out in the marketplace that want to inquire, they should do so soon, either with Beckman or the Q3DM folks, because the more time that goes by, the more the team will be dissipated and unable to be reconstituted," the former official said.

"Before we're all off doing our next thing, it would be nice to find out if there are parties out there that think this can be resurrected," he added.

— Ben Butkus ([email protected])

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