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Report Sees Continued Growth for Fluidigm as Company Remains 'Interesting' Acquisition Target

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Fluidigm's product revenues are expected to grow 27 percent annually over the next four years, buoyed by the company's participation in three rapidly growing niche markets — sample preparation for next-gen sequencing, single-cell genomics, and digital PCR — according to a market research report published last week.

Based on this expected growth, which is expected to outpace growth of the overall genomics market, Fluidigm remains an "interesting acquisition target" for companies seeking to enter or bolster their position in the genomics space, the report states.

According to the new report, compiled by Los Angeles-based market research and consulting firm DeciBio, Fluidigm's product revenues are expected to grow 27 percent per year between 2011 and 2015, from $41 million to $104 million.

Fluidigm, based in South San Francisco, Calif., currently offers four instrumentation platforms: the BioMark HD for gene expression, genotyping, digital PCR, and single-cell analysis; the EP1 for genotyping and digital PCR; the Access Array for NGS sample preparation; and Topaz for protein crystallization. In addition, Fluidigm plans to launch another platform, the C1 single-cell AutoPrep sorter for single-cell isolation, in the second half of this year (PCR Insider, 5/17/2012).

According to DeciBio — which based its report on company filings, publications, earnings calls, and interviews of both users and non-users of Fluidigm products — the company's expected revenue growth will likely be primarily driven by a 24 percent compound annual growth rate through 2015 of both the BioMark HD for single-cell analysis and the EP1 for genotyping production testing in applied markets and academic research.

Meantime, sales of Fluidigm's Access Array for NGS sample preparation are expected to achieve a 14 percent CAGR through 2015 with the majority of growth through 2014; while sales of the new C1 platform will likely grow slowly to top out at about $17 million in 2015, the report states. However, it also notes that revenues for the Topaz system are expected to decrease significantly to less than $2 million by 2015 as Fluidigm continues its transformation to a pure-play genomics tools company.

Overall, the worldwide genomics tools market was estimated at around $6.8 billion in 2011, and is forecast to grow at around 6 percent annually, the report states. And, although Fluidigm's products address common applications across this market, they also address "three other distinct niche markets" expected to experience fast growth between 2011 and 2015: NGS sample prep (from about $125 million to $250 million); single-cell genomics (from about $50 million to $250 million); and digital PCR (less than $10 million to about $175 million).

"Fluidigm benefits from strong name recognition in NGS sample preparation (despite a limited share estimated at 5 percent to 10 percent), has established a potentially sustainable market leadership in single-cell genomics, and may benefit from strong growth in the dPCR markets," the report states.

In terms of market competition, the DeciBio report noted that Fluidigm's products compete on four fronts: mid-throughput, mid-plex qPCR for gene expression and genotyping; NGS sample prep; digital PCR; and, to a limited extent, molecular diagnostics.

On the qPCR front, Fluidigm faces competition from a variety of companies offering both qPCR and alternative technology platforms, such as bead-based systems, microarrays, and NGS; but, the report noted, the OpenArray-based products offered by Life Technologies through its December 2009 acquisition of Biotrove "represent the most immediate threat to Fluidigm's mid-plex mid-throughput business."

Meantime, for NGS sample prep, and particularly target enrichment, Fluidigm's biggest competitors remain Agilent, Roche NimbleGen, Illumina, and RainDance; and for digital PCR its main rivals include Life Technologies, Bio-Rad's QuantaLife business, and RainDance, although the report notes that a handful of smaller companies are attempting to get their foot in the door of the digital PCR market.

Regarding the digital PCR landscape, the report noted that Fluidigm's ability to "maintain leadership in this segment might be difficult, given the edge droplet-based technologies may offer," such as those from Bio-Rad and RainDance.

The report also noted that Fluidigm as a company is not without its weaknesses, starting with the fact that it is a smaller company than competitors such as Life Tech, Illumina, Roche, and Bio-Rad, with limited financial resources that may prevent Fluidigm from investing in R&D, developing its sales force, and considering potential acquisitions to complement its technology or IP portfolio.

And, the company lacks molecular diagnostics experience, although officials have recently stated that Fluidigm will for the time being put its MDx aspirations on the back burner.

Nevertheless, in 2006, Fluidigm introduced the BioMark HD and shifted its focus to build expertise and customer relationships among a small population of genomics researchers, a strategy that "has started to pay off, as Fluidigm is now a leader in two niche genomics markets: single-cell analysis and digital PCR," the report states.

While these markets are currently small, they are expected to grow rapidly in the next few years, and Fluidigm has "strong brand recognition in other larger genomic markets, such as mid-throughput/mid-plex genotyping and gene expression analysis or NGS sample preparation," the report adds. As such, "Fluidigm is in a unique position to benefit from the overall growth in its niche market."

The report summarizes that "overall, modeling of Fluidigm’s revenues based on our primary and secondary research suggest that the company is poised to continue to experience revenue growth that far outpaces the overall genomics market. However, the company is not expected to be profitable for the next couple of years."

Regardless, "Fluidigm remains an interesting acquisition target for companies interested in entering genomics or bolstering their offering in that space," the report states.

DeciBio added that since it began tracking Fluidigm in 2009, it has "demonstrated great execution and has consistently met its technical (e.g., product release, product performance) and financial (e.g., revenue guidance) commitments."

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