Invitrogen said last week that it has formed an “integration team” to prepare for its acquisition of Applied Biosystems.
The effects of the acquisition on ABI’s SOLiD business and its alliances with third-generation sequencing companies remain to be seen, but SOLiD customers said they are not concerned that the deal will have short-term effects on their ability to obtain service and support for their instruments.
Longer term, they say, the technology may benefit from Invitrogen’s biochemistry expertise but caution that any disruption caused by the acquisition could cause the SOLiD to fall behind the competition.
The integration team, headed by Mark Smedley, Invitrogen’s global head of operations, comprises more than 30 employees from both companies “who will take the best parts of their own organizations to plan for a stronger, better combination,” Invitrogen chairman and CEO Greg Lucier said in a statement.
He said that the group will oversee a “highly structured program to drive a seamless and efficient integration.” The new company, which will be called Applied Biosystems, will likely consist of three businesses: molecular and cellular biology reagents; genetic sequencing systems; and mass spectrometry.
Eventually, the company hopes to save $125 million annually by cutting redundant corporate overhead, raw material costs, and licensing fees, and by creating so-called “manufacturing centers of excellence.” It also hopes to gain $50 million per year from “revenue synergies.”
Invitrogen has said that ABI’s SOLiD sequencing business will remain “untouched in this whole integration planning,” and that together the companies plan to improve reagents and sample-prep workflows for several SOLiD applications (see In Sequence 6/17/2008).
Four SOLiD customers told In Sequence last week that they do not expect any changes in service and support to happen in the short term. All mentioned both positive and negative potential long-term outcomes of the merger.
Three customers pointed out that Invitrogen’s expertise in reagents and biochemistry is good news for SOLiD, if the company is willing to continue to invest in the platform, especially in new applications. The two companies, they say, complement each others’ strength in that area.
“I expect that SOLiD customers will benefit from the merger as Invitrogen will bring extra biochemistry experience to the hardware experience of ABI,” said Eugene Berezikov, a group leader at the Hubrecht Institute in Utrecht, the Netherlands, which has a SOLiD system.
“Potential delays with needed improvements to the SOLiD platform could have serious consequences to the spread of SOLiD.”
“The technology behind an instrument like SOLiD is one thing, but it is certainly the applications for the instrument that determine how we use the machine,” said Bill Farmerie, who heads a core facility at the University of Florida, Gainesville, which recently upgraded its SOLiD system to version 2.0. He said he hopes that Invitrogen will focus on developing new applications for the platform.
More applications could potentially boost SOLiD sales, he suggested, “because the community has a better notion of how the instrument benefits their research program.”
On the other hand, customers fear that any delays in Invitrogen’s commitment to SOLiD, or delays caused by the acquisition itself, could have a large negative effect, especially given the stiff competition from Illumina’s Genome Analyzer and other emerging sequencing systems.
“The important question for now is how the merger will impact ongoing development of the SOLiD,” Berezikov said. “Potential delays with needed improvements to the SOLiD platform could have serious consequences to the spread of SOLiD.”
“The race is on,” said Peter Pohl, CEO of German sequencing service provider GATC Biotech, which owns a SOLiD system, two Illumina Genome Analyzers, and two 454 Genome Sequencers FLX. “If Invitrogen does not focus on the primary interest of ABI sequencing customers [such as] reliable support, development of [sequencing] capacity, et cetera, the danger is quite high that they lose substantial market share to the competition.”
It is also possible that the third-generation sequencing platform that Invitrogen has been developing and plans to commercialize following the merger with ABI could compete internally with the SOLiD for R&D resources, according to a sequencing facility manager who asked to remain anonymous because he has close relationships with both Invitrogen and ABI.
However, it is the actual performance of the SOLiD system, rather than the perception of what Invitrogen might do to it in the future, that will likely determine in the short term what sequencing system new customers purchase, several of the current customers said.
The fact that Invitrogen is developing its own third-generation sequencer also raises questions about the future of ABI’s own efforts in this area.
Over the last few years, ABI has forged alliances with at least two developers of third-generation sequencing technology, VisiGen Biotechnologies and Eagle Research and Development.
In late 2005, ABI made an undisclosed equity investment in VisiGen, a Houston-based startup company that is developing a single-molecule real-time long-read sequencing technology (see In Sequence 5/8/2007).
VisiGen did not respond to requests for comment before deadline about whether this collaboration remains ongoing, and ABI did not comment on the subject.
In October 2006, ABI announced a research collaboration with Boulder, Colo.-based Eagle R&D to further develop a nanopore-array-based single-molecule-detection device. ABI also obtained a two-year option to license the technology.
Although ABI said at the time that it was initially focusing on protein-based applications of the technology, it pointed out that it had long-term potential for DNA sequencing.
Eagle R&D founder and CEO Jon Sauer told In Sequence last week that ABI terminated the research collaboration about a year ago, one year earlier than originally planned.
ABI did not comment on why it ended the research agreement.
The company had also developed and evaluated new sequencing technologies internally in its Advanced Research and Technology group. Last summer, Dennis Gilbert, ABI’s chief scientific officer and vice president for research who headed the group, left the company unexpectedly (see In Sequence 8/7/2007).