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In Reorganization, Applied Biosystems Creates Proteomics and Small Molecules Division

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Applied Biosystems’ proteomics business will soon become part of a new division called “proteomics and small molecules,” following the company’s reorganization, which it made public last week in a filing with the US Securities and Exchange Commision

The new division will be headed by Laura Lauman, who has been vice president of ABI’s discovery proteomics and small molecule business since 2002. In that capacity, she has already been responsible for managing the proteomics and small molecule product lines, which include mass spectrometry, protein sequencing, peptide sequencing, biochromatography, and proteomics reagents, as well as their application research center in Framingham. In addition, she has been in charge of the ABI/MDS Sciex joint venture in Toronto. During the last quarter, ending March 31, ABI’s mass spectrometry product category contributed $109.4 million, or 25 percent, to the company’s total revenues.

Though the proteomics and small molecule unit will still be geographically dispersed in Foster City, Calif., Framingham, and Toronto, organizationally it will unite various aspects of the business, including sales and marketing in North America, research and development, some aspects of manufacturing, and administration, with the exception of service.

This new organization by business, rather than functions, “will give division presidents responsibility and accountability for their division’s business plan, P&L and performance,” according to the SEC filing. “The intention is to provide the new business divisions with the focused resources, decision authority, and accountability that we believe they need to drive business planning and performance,” the filing said.

Under its reorganization, Applied Biosystems created four new business divisions. At the same time it laid off approximately 145 staff members. Besides proteomics and small molecules, the divisions are: Molecular Biology, including DNA sequencing and synthesis, Real-Time PCR (formerly sequence detection systems), and microarrays; Applied markets, including forensics and other human identification, biosecurity, food/agriculture, and environment; and Service, which will include the laboratory information management systems.

ABI had already created another unit, Advanced Research and Technology, during fiscal year 2004 that will seek new technologies, both in-house and through licensing, that could drive the company’s business in the future.

Another new unit will incubate new businesses “in new or underserved markets,” the company said in the filing.

The restructuring and layoffs resulted from a strategic and operational review of ABI’s business by outside consultants from Bain & Company, conducted over the last six months, with the aim to improve its performance.

Although the company has been profitable over the past year, sales have fluctuated in certain product areas. During the third quarter, ending March 31, for example, instrument revenues increased in the mass spectrometry and sequence detection systems/other applied genomics product categories but declined in DNA sequencing and other product lines categories.

A company spokeswoman said that Applied Biosystems expects to field questions about the new divisions during a conference call, scheduled for July 28, following the release of its fourth-quarter and year-end earnings.

—JK

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