SAN FRANCISCO (GenomeWeb News) – Danaher will likely use at least part of its $8 billion available for acquisitions in order to expand its life science and diagnostics portfolio, company President and CEO Larry Culp said at the 32nd Annual JP Morgan Healthcare Conference here this morning.
During the firm’s analyst day meeting last month, Culp said that the firm had at its disposal about $8 billion available to pursue merger and acquisitions and today he reiterated that figure while adding that the firm “will continue to be an active acquirer” throughout 2014 and beyond.
Since purchasing Beckman Coulter in 2011 for $6.8 billion, Danaher has spent much of its resources integrating that business into the company. But in recent months, it passed a major milestone with US Food and Drug clearance of Beckman troponin assays for its immunoassay platforms, paving the way for Danaher to once again dive into the M&A market.
Culp said that there are no particular gaps in the company’s LS&D portfolio that it needs to plug, but rather the company will “come from an offensive position” in pursuing deals by leveraging the strengths of its existing businesses such as Beckman Coulter, as well as AB Sciex and Leica, to increase the value of a strategic buy.
Earlier in the week, Danaher’s competitor Agilent Technologies cited DNA sequencing as a hole in its life science technology portfolio. Culp said that while Danaher also is exploring adding a sequencing business, he doesn’t believe the firm must jump on the sequencing boat. He suggested that if Danaher does a deal in the space, it could be one that addresses the sequencing workflow, rather than one for an instrument firm.
Culp also updated the progress made by Beckman since its purchase by Danaher. At the time the deal was announced, Beckman was seen as a firm in trouble as its troponin assays delivered unreliable results and had to be recalled. The company was also grappling with a warning from the FDA that Beckman had marketed the test without its approval. Scott Garrett resigned from the company as president, CEO, and chairman about five months before Danaher announced the purchase.
Citing the recent FDA approval of the troponin assays as a sign of progress, Culp noted that the Beckman business has also increased on-time delivery of services and products to 90 percent from 80 percent over the past two and a half years. And while Beckman had more than 2,000 scheduled maintenance calls that were past due at the time of the Danaher purchase, it has since reduced that backlog by more than 80 percent, he said.
Meanwhile, core growth at Beckman has improved from flat to six consecutive quarters of low-single digit growth, and its operating margin has risen to the mid-teens from about 10 percent.
Beckman has also been developing a molecular diagnostics platform for several years that is targeted at infectious disease. The platform is “out on the market” in Europe and Danaher plans to hold off any introduction in the US for now as it evaluates its reception in Europe, Culp said.
“We have overpromised and under delivered,” on the instrument, he said.
On the mass spectrometry front, he said that a goal is to move the instruments, which are housed in the AB Sciex business, into the clinical space. He was short on details about Danaher’s plans or strategy but said that seeking FDA approval would be part of the roadmap.
Lastly, Danaher said on Tuesday that it anticipates adjusted EPS and core revenue growth in the fourth quarter to be in the high end of previously announced guidance. The firm had said that adjusted EPS would fall between $.91 and $.96, while core revenue growth would be between 2 percent and 3 percent.
Culp said today that core revenue growth is expected to be 2.5 percent. He did not provide an adjusted EPS figure. The consensus analyst average is $.96. Danaher is scheduled to release its fourth-quarter and full-year 2013 financial results on Jan. 28.
Overall, the firm’s LS&D business brought in about $6.8 billion in revenues in 2013, Culp said.