The vendor-proof-cap is twisting open again on big pharma’s bottle of money for proteomics and other drug discovery instruments, PerkinElmer and Thermo Electron executives indicated during the companies’ second quarter conference calls last week.
“In the latter part of June, starting the second and third week, we started to see significant increase in demand” from biopharma, Robert Friel, Perkin Elmer’s CFO, said in response to a question from an analyst.
This uptick was “not just an increase in quotes but actual orders — higher end [higher] throughput instruments, the liquid-handling instruments.” Friel said, adding that it was a “little late” to ship these instruments before the end of the quarter, but the increase served as “an indication that the back half will be a little stronger” than the first half of the year.
Marijin Dekkers, president and CEO of Thermo Electron, gave a similar account. “We have seen, particularly at the end of the second quarter, clearly more activity with the large pharmaceutical cus-tomers,” Dekkers said. This activity included new business as well as orders the company has “been working on for a while.” But, he added, “we have not yet seen that increased activity on the bio-tech side.”
For both companies, this apparent loosening of the cap on capital spending by big pharma comes after a period of depressed sales in drug discovery that have dragged down overall revenues and income.
On July 23, PerkinElmer reported nearly flat second-quarter revenues of $377.1 million, compared to $383.1 million for the second quarter of 2002, and income for the quarter was $8.4 million, compared to $9.1 million for the year-ago quarter.
Revenues for the company’s life and analytical sciences business came to $246 million, compared to $250 million in the same period last year, Friel said.
In the biopharma area, revenues were down 16 percent year-over-year, although they were up 4 percent compared to the first quarter. Also, Friel reported that the company saw growth in proteomics, but that this growth was offset by lower instrument sales in large pharma and biotech. The company sells a Proteomic Imaging System, 2-D image analysis software, a gel cutting robot, a proteomics workstation for in-gel digestion and spotting, and recently launched its new prOTOF 2000 mass spectrometer, a MALDI-TOF instrument that uses an orthogonal rather than a lin- ear design.
Thermo’s second quarter revenues overall increased one percent year-over-year to $516.4 million, compared to $509.1 million in the second quarter of 2002, the company reported July 22, but “organic revenues” — those arrived at after accounting for currency effects and the impact of divestitures and acquisitions, decreased 5 percent. Income decreased to $53.1 million compared to $68.5 million for the second quarter of last year.
In the life and laboratory sciences sector, revenues increased to $313.8 million, from $290.2 million in the second quarter of 2002, while organic revenues increased one percent year-over-year, the company said.
The revenue increase included increased sales of mass spectrometry systems (along with laboratory informatics software and clinical diagnostics systems), while sample preparation and storage equipment was weaker.
In terms of future product development, both companies have trimmed R&D expenses slightly. PerkinElmer’s expenses for the quarter came to $21.9 million, compared to $22.6 million for the second quarter of 2002, while Thermo’s R&D expenses decreased to $37.1 million from $39.8 million in the year-ago period.
Thermo and PerkinElmer also reported that the market is showing interest in their new mass spec products.
PerkinElmer, which officially launched the prOTOF 2000 in February (see PM 2-10-03), has been “working with potential customers to qualify their applications on the product,” said CEO Gregory Summe. “We feel very good about the performance of the product and essential customers feel very good about it,” he said.
Thermo, which launched its FTMS at Pittcon in March (see PM 3-17-03) also is seeing “very strong interest” on the product, according to Dekkers, and customers are “having very good feedback on the performance of that instrument.” While the company has shipped fewer than five units, “the order intake has been good,” he said.
Industry observers will have to wait until the end of the third quarter, at least, to see if this good feeling turns into good sales.