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Thermo Fisher 'Ruthlessly' Focused on Winning in Mass-Spec Space, CEO Tells Investors

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By Tony Fong

Thermo Fisher Scientific's chief executive, speaking at the annual JP Morgan Healthcare Conference this week, challenged his competitors in the mass-spec space to better his company's technology and to capture more market share, and said Danaher's recent entry into the market is a non-factor.

"Our competitors launch products every year and they say we look long in the tooth and we look tired," Thermo Fisher CEO Marc Casper said in a webcast question-and-answer session following his presentation at the conference, which was held in San Francisco. "And we love the challenge. We love to hear that people are trying to challenge us because at the end of the day, we are confident in our technology, we are confident in our scientists, and we are ruthlessly focused on winning in that space."

Casper also took aim at a new rival. In an earlier presentation at the JP Morgan event, Danaher CEO Larry Culp talked about his firm's acquisition of the ABI/MDS mass-spec joint venture and said that with the business under Danaher's sole control — rather than being split between two companies — it would become "rejuvenated."

Culp said a turnaround would follow the closing of Danaher's purchase, still slated for the first quarter. "We see potential to take advantage of some of the things [ABI and MDS have] done both clinically and in some of the applied markets and increase our investment levels there," he said, adding that the business will be "a long-time contributor" to Danaher.

Casper, however, saw it differently. While he called Danaher a "fine company," he said the erstwhile ABI/MDS joint venture has lost a "reasonable amount of share" in the mass spec space in recent years to Thermo Fisher. He said driving this were breakthroughs in Thermo's technology, such as its Orbitrap platform.

"We feel good about our market position … and a change in [ABI/MDS'] ownership doesn't change very much the competitive landscape from that perspective," Casper said. "We went from a business that [did] ballpark $100 million in 2001 to a ballpark $500 million business today, really just through constant innovation."

At the American Society for Mass Spectrometry conference last spring, Thermo Fisher launched the Velos and LTQ Velos platforms. This week, Casper said the tools have been "incredibly well received" by the market and have contributed to the company's strong organic growth in its life science mass-spec business.

In 2010, he added, the company anticipates seeing "incremental growth opportunity" in mass specs.

Bruker's 'Pretty Good Year'

If there was one theme at this year's JP Morgan conference among the mass spec vendors it was that the economic meltdown wasn't as bad as originally feared — though there were significant challenges during the year.

With 2010 just begun, officials from these firms were optimistic that the improvement in the broader economy would continue into 2010 and raise their own businesses. Officials from presenting proteomics-directed firms said the companies will continue on their growth trajectory.

The most optimistic look-back on 2009 came from Bruker president and CEO Frank Laukien, who said the year "really did turn out to be a pretty good year for us."

New product introductions more than anything else "cushioned" Bruker against the effects of the recession, he said. In preliminary results, he said that company-wide revenues for the fourth quarter of 2009 are projected to be $340 million, up 8 percent from $315 million in the year-ago period. He added that revenues for full-year 2009 are anticipated to be flat compared to 2008.

For full-year 2010, the business is forecast to grow in the high single digits to 10-percent range, Laukien said.

Bruker Daltonics, the business that houses Bruker's mass spec business, was the fastest growing division in terms of revenue, orders, and margin improvement, Laukien said, without elaborating. In 2009, the company launched a number of mass spec platforms with proteomics applications, including the ultrafleXtreme MALDI-TOF/TOF, solariX FTMS, Edmass, and Lucid Proteomics.

Mass-spec orders in the US and Canada with life science applications, Laukien said, grew by more than 50 percent last year. While he attributed some of that to stimulus funding, especially from Europe and Asia, "I think the biggest driver was the strength of our product line."

NIH stimulus funds have been slow to reach researchers and vendors such as Bruker, he added.

Waters' 'Conservative' Year

Meanwhile, Waters President and CEO Douglas Berthiaume said that the uncertainty of the global economy forced his firm to approach its business like fiscal hawks in 2009.

"We set our budgets conservatively [and] we certainly managed conservatively," he said in a webcast of his presentation. The only area in which company officials did not want to skimp was new product development.

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That was most evident in high-end mass specs, he added, singling out the introduction of the Synapt G2, the "quickest ramp-up of high-end spectrometry" in Waters history. Early adopters have been proteomics and metabolomics researchers, he said.

Mass specs weren't the only instruments that appeared to remain in high demand in 2009. Waters reported that adoption of its Acquity UPLC continued to ramp up, and during the conference the company announced the acquisition of four Acquity systems by the Taiwan Bureau of Food and Drug Analysis, which will use them for food safety monitoring.

Other ultra-high performance LC systems have been launched since Waters debuted Acquity in 2004, but Berthiaume said that the "market has been slow to catch [up], and the Acquity UPLC continues to be what would drive the future of chromatography forward."

Agilent Eyeing Proteomics Work in China

Agilent Technologies had something to say about that. In April it launched the 1290 Infinity UHPLC system to challenge the Acquity, and at the JP Morgan show Nick Roelofs, president of the company's newly minted Life Sciences group, said the platform has positioned Agilent as the leader in that technology space.

And while he told ProteoMonitor last year that the company would be investing a smaller percentage of revenues into life science R&D [See PM 03/12/09], this week he said that Agilent still sees investing into its technology pipeline as crucial as it looks to eat up more of the life science pie. That includes continuing to develop its mass specs, he said.

Advances in triple-quad, Q-TOF, and TOF platforms "are making us a leader in this technology and causing us to move up considerably in our market share position," he said in a webcast.

He added that Agilent is seeing "growing and accelerating" desire in China to do more proteomics work and that the company will seek to capitalize on that. He did not elaborate.

Roelofs provided no update during his presentation on the company's pending acquisition of Varian. Before Christmas, the European Commission said it was extending its antitrust review of the deal to Jan. 20.

2010 Priorities

In addition to giving a review of the year past, company officials vaguely alluded to additional new product launches for the coming year, including those with proteomics applications.

Looking at 2010, the CEOs have varying goals: Casper said Thermo Fisher's four main priorities include continuing to invest in R&D and to "deploy capital" to strengthen its product portfolio.

Other priorities he identified are driving organic growth; growing customer allegiance through "our unique value proposition [and its] differentiated offerings;" and continued expansion of Thermo Fisher's operating margins.

Meantime, Berthiaume said Waters has a "strong" new product line of enhancements to the Acquity and its mass specs, while Laukien highlighted Bruker's continuing efforts to bring to the US its MALDI Biotyper for microorganism identification. The platform, which uses protein fingerprints to identify and classify microorganisms, was launched in 2006 but to date has been available only in Europe.

Laukien said the platform provides higher molecular specificity and faster resolving times and lower costs compared with competing platforms.

Lastly, in December PerkinElmer took a legal challenge to MDS' plan to sell its Analytical Technologies division to Danaher. The transaction is related to Danaher's purchase of the ABI/MDS mass spec joint venture.

PerkinElmer has a joint venture with MDS on inductively coupled plasma mass specs. As part of the Analytical Technologies deal, MDS would need to divest its half of the PE JV — a transaction that PE would need to approve. The company has not consented, and in a Notice of Application sought alternative remedies, including an injunction to prevent MDS from selling the Analytical Technologies business.

At JP Morgan, PerkinElmer declined to comment on the dispute, though CEO Robert Friel said it wants its joint venture with MDS to stay with MDS and not be "outsourced to Danaher."

Ed Winnick, editorial director of GenomeWeb Daily News, contributed to this story from San Francisco.