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Life Tech Says Phase-Out of CE Systems is 'Largely Complete' as Next-Gen Sequencing Gains Traction

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By Julia Karow

Life Technologies expects its capillary electrophoresis business will remain "relatively stable" in the future as the shedding of CE instruments by large genome centers is "largely complete," according to a company official.

Last week, the company reported $874 million in total revenues for the fourth quarter, and $3.3 billion for 2009. Less than 5 percent of revenues — translating to less than $44 million for the fourth quarter, and less than $165 million for the year — currently comes from next-generation sequencing, according to Greg Lucier, the company's chairman and CEO, who spoke during a conference call to discuss the firm's earnings.

Life Tech's Genetic Systems division, which includes capillary electrophoresis and next-gen sequencing systems, booked $234 million in revenues for the fourth quarter, an increase of 16 percent over the same period a year ago, and 13 percent when excluding the impact from currency and the divestiture of Life Tech's LIMS business. For all of 2009, Genetic Systems had $907 million in revenues, an 8 percent increase over 2008, and 9 percent organic growth.

Revenues from CE systems and consumables sold into the research market were flat, both for the fourth quarter and for all of 2009, a better-than-expected result, according to Life Tech President and COO Mark Stevenson.

He explained that the company had expected this market to decline by high-single to low-double-digit percentages as genome centers retired CE systems and replaced them with next-gen sequencers. But apparently, he said, "that switch has already occurred."

"We now believe that the decommissioning process is largely complete, and going forward, we expect this business to be relatively stable."

Stevenson also noted that in clinical research in particular, there remains demand for CE sequencers, and the company is currently "in discussions" to apply for 510(k) clearance from the US Food and Drug Administration for its 3500 Genetic Analyzer, a Dx version of which it CE-IVD-marked for diagnostic use in Europe last year (see In Sequence 5/26/2009).

In the applied markets — including forensics and environmental testing — sales of CE systems and kits grew in double-digit numbers in the fourth quarter, and the company expects this business to continue to grow "at a similar rate" in the coming year. As an example, CFO David Hoffmeister cited an order from the Japanese police force for a number of 3130xl sequencers and consumables kits, which contributed $9 million in revenue in the fourth quarter and $20 million in 2009.

Next-gen sequencing "continues to gain traction" and posted double-digit growth in the fourth quarter, according to Stevenson. The company expects that its platforms in this area — including its SOLiD system and a single-molecule sequencing technology it plans to reveal at the Advances in Genome Biology and Technology conference later this month — "will continue to drive strong growth in the years to come," and next-gen sequencing is expected to grow in double digits in 2010.

Separately last week, the company announced an update to its SOLiD system, to be launched this quarter, that will increase the instrument's output to 100 gigabases per run, and to 300 gigabases this run later this year with an additional upgrade (see related story, this issue).

With regard to its single-molecule sequencing technology, "We see a good place for that in the market, but it's complementary to other next-generation sequencing tools, and we think it's also complementary to CE," Stevenson said.

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