By Tony Fong
SAN FRANCISCO (GenomeWeb News) — As Danaher proceeds with the integration of Beckman Coulter, there is "a lot of work still to do in quality and innovation," but progress has been made, Danaher CEO Larry Culp said at the JP Morgan Healthcare Conference here today.
And while the Beckman Coulter business may not improve substantially over a flattish 2011, momentum can be built this coming year into 2013, Culp said.
Danaher completed its $6.8 billion acquisition of Beckman in June and since then Beckman has been split into three segments focused on diagnostics, life sciences, and molecular diagnostics. Ten full-time Danaher people have also been moved into Beckman to lead that business and implement the Danaher Business System, an operational process designed to cut waste and improve productivity.
Recently, Danaher increased its cost synergy target to $350 million from $250 million, a result of cost-cutting goals that have been achieved more quickly than originally expected, Culp said. He acknowledged that Beckman has lost some customers as it works through quality issues — the company last year received warning letters from the US Food and Drug Administration about violations in its Miami, Fla., and Brea, Calif., facilities. Culp noted, however, that the attrition has stabilized and new customers have been added to the fold.
The company is "encouraged" by early signs that the quality issues at Beckman are beginning to be resolved, Culp added. Much of the problems revolve around Beckman's AccuTnl troponin test kits, but Danaher expects to refile the assay with the US Food and Drug Administration during the first quarter, Culp said.
He added that new products are also in Beckman's R&D pipeline. Though he didn't elaborate, he said that work that Beckman had started in the molecular diagnostics space prior to being bought by Danaher remains ongoing. Danaher is focused on trimming excess fat from its operations but about $40 million will continue to be funneled into R&D work at Beckman directed at molecular diagnostics.
Culp also said that AB Sciex, which Danaher bought from Life Technologies in early 2010, had a "phenomenal" 2011. During the year, the mass spectrometry instrument business generated $600 million in revenues, up from $475 million in 2009, the last full year AB Sciex was part of Life Tech. Culp called the company a key growth driver moving forward for Danaher's life science business as well as the company overall.
Danaher is an aggressive purchaser of other businesses, and for 2012 it is likely to make about 12 to 15 buys, a pace it has maintained for several years, Culp said, though none is anticipated to approach the size of the Beckman deal.
The firm expects to spend about $4 billion to $5 billion in mergers and acquisitions in the next "couple of years," he said, but the focus will not be on healthcare or medical companies. Rather, Danaher is eyeing deals in the environmental, industrial, and test and measurement markets, Culp said.