NEW YORK (GenomeWeb News) – Speaking today at an investors conference, Agilent Life Sciences Group President Nick Roelofs reiterated that the pending $2.2 billion acquisition of Dako will further Agilent's push into the diagnostics market, providing it with new expertise and customer channels.
At the Jefferies 2012 Global Healthcare Conference, Roelofs re-emphasized that the purchase was driven by revenue synergies, and added that it also provides Agilent with expertise in the US Food and Regulatory process that it currently doesn't have.
According to Roelofs, about 1 percent of Agilent's total business is in the diagnostics space, and though the company has had its toes in the diagnostics space for "some time," it lacked competency with the regulatory process. The purchase, which is expected to close within the next 60 days, will fill that gap, Roelofs said, and will help Agilent navigate through the clinical trials process, the filing process, and expectations that FDA may have.
In the past year, Agilent has taken steps to push further into the diagnostic space with the FDA registration of its facility in Cedar Creek, Texas and a partnership with Integrated Diagnostics.
Roelofs also addressed lingering questions about the value that Dako will add to Agilent. He acknowledged that Dako, especially its immunohistochemistry business, has underperformed and has not kept pace with the market growth rate. Dako is taking a step toward fixing that with a planned launch of an automated platform for the IHC space within the next year.
He cautioned, however, that even if Dako is successful in meeting its timeline with a launch, it will not return to market-growth rate for about three years, the amount of time it will take to pierce a market that is currently dominated by Roche's Ventana Medical Systems and Danaher's Leica Microsystems.
In the meantime, Agilent plans to hasten the overall growth of Dako by moving its fluorescent in situ hybridization products into Dako's channels, Roelofs said.
The overall rationale behind the deal was to find someone to both provide it with regulatory expertise, as well as help leverage Agilent's existing technologies to an existing sales channel, he added.
Roelofs also commented on the current state of the academic/government end market, and was most enthusiastic about the Asian markets, especially China and Southeast Asia, which he said "look pretty good for the next couple of quarters."
In China, he added, investments are being made into the proteomics and therapeutic space, and the government has spent substantial resources building infrastructure to build out its life science capabilities and will need to equip laboratories with instruments and technologies.
Europe, meanwhile, also continues to invest into the life sciences, but in the US he cautioned that during the calendar fourth-quarter US academic/government spending may dip substantially. So far, Agilent's customers have been oblivious to the possibility of sequestration and a potential 8 percent reduction to the National Institutes of Health's budget. Once researchers return from summer vacation and start preparing their grant proposals, though, that possibility could hit them.
While the NIH budget picture is still unclear, and most don't expect clarity until after the presidential elections in November, Roelofs said he sensed the political will in Washington to spare NIH and the National Science Foundation from drastic budget slashes.
About 1 percent of Agilent's total business is tied to NIH/NSF, he said.