Analytical instrumentation giant Waters last week swallowed up NuGenesis Technologies — the Westborough, Mass.-based developer of the Scientific Data Management System informatics platform — in a $43 million deal.
Waters said it expects the purchase of the 140-person company to be completed before the end of the quarter.
NuGenesis brought in more than $21 million in revenues for 2003, and claims some of the world’s biggest pharma and biotech companies among the “partial” list of 170-plus customers on its website. Given that Waters had nearly a billion dollars in 2003 revenues, $21 million is a drop in the bucket, but that didn’t diminish the enthusiasm of the company’s executives regarding the deal. During the company’s fourth-quarter earnings call on Jan. 29, CEO Douglas Berthiaume said that the acquisition is a “very exciting investment” for Waters and fits into the company’s “long-term strategic interest in developing a data and software platform that expands into the total scientific data management arena.”
The deal is Waters’ second purchase of a software firm in six months, and follows on its acquisition of Creon Lab Control last summer.
Gene Cassis, vice president of investor relations at Waters, told BioInform that the company has been looking into expanding its current informatics capabilities, which are essentially data-capture systems that are specific to certain categories of instruments that Waters manufactures. “We are a large supplier of networked chromatography data station systems,” Cassis said, but added that the NuGenesis system will add a new level of capability for Waters customers. SDMS “lives above the Waters type of software product, in that information that’s stored in the Waters software … can be transported to the NuGensis product, and can be blended with analytical results from other instrumentation methods, and customized reports can be created that include both chromatographic methods as well as other methods that may have been applied to the same sample set,” he said.
Although there is “some overlap” between the Creon and NuGenesis product lines, NuGenesis does fill in a few gaps that remained after the Creon acquisition, Cassis said. For example, Creon is based in Germany, so its user base is mostly located in Europe, while Nugenesis primarily has a US customer base. In addition, he said, “with the acquisition of Creon, we also got some interesting development resources to help accelerate some internal programs that we had within Waters. So there was more of a technology resource buy with Creon, and not so much a buy of a revenue stream. Whereas with NuGenesis, we’re getting a much larger revenue stream, as well as some technology.”
Waters said it expects about $14-15 million in revenues from the Creon subsidiary in 2004, and expects NuGenesis to add $25 million to its 2004 sales.
Cassis said that Waters intends to take advantage of its large size and global presence to extend the user base for SDMS globally. “Our biggest hope is that we can take this product and we can distribute it over a much wider geographical area and give the drug companies more confidence in the long-term viability of a partnership with us,” he said.
It’s not likely, however, that another informatics buy is in the future following the company’s recent ramp-up. “I’m not sure there’s an obvious next target …I think right now we do have the critical mass to be a very viable competitor,” said Cassis. However, he added, “Any acquisition that we make on the instrument front will have obvious software needs that go along with it.” Berthiaume said that while the company will likely be evaluating other acquisitions in the same price range as NuGenesis in the coming year, “there are fewer opportunities that we’re ready to say are right in front of us in terms of larger acquisitions.”