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Jul 26, 2012

Life Science Tool Providers Boast Impressive Sales

  • Wall Street warmed up to three research tools companies, whose shares rose yesterday following better-than-expected second-quarter results and improved earnings forecasts for 2012.

    Thermo Fisher Scientific finished at $54.14 (up $4.36 or 8.76%), Qiagen $17.04 (up 95 cents, 5.90%), and Illumina $41.70 (up 18 cents, 0.43%). All three exceeded analyst expectations, benefiting from more diagnostics purchases by “Tier II” biopharmas and niche users ranging from industrial companies to forensics labs.

    Also strong was Roche’s diagnostics division, which saw a 5% sales gain, driven in part by expansions in tissue diagnostics and immunoassays.

    “Certainly biopharmaceutical [companies are] now the silver lining of this market,” Jonathan Witonsky, industry manager, life science research tools & in vitro diagnostics with Frost & Sullivan, told GEN. “When you look at Tier II biotech companies, the growth rates coming from their purchases of these life science tools is still in the 5%–10% range.”

    The traditional academic customer base is flat-to-shrinking, though universities should step up purchases this year because of possible across-the-board federal budget cuts in 2013, he added.

    Roche expanded its product lines in both with launches of the VENTANA iScan HT slide scanner, capable of scanning up to 80 tissue slides per hour into high-resolution digital images; and the BenchMark Special Stains platform, enabling staining of patient tissue to visualize structures and pathogens for cancers and other diseases.

    Roche also launched new immunoassays for hepatitis B and hepatitis C, and later this year will launch tests that detect early ovarian cancer and measure vitamins D2 and D3.

    Thermo Fisher CEO and President Marc N. Casper told analysts on the company’s quarterly conference call that ongoing strength in clinical diagnostics, especially biomarkers, accounted for a 28% leap in specialty diagnostics sales. Thermo expects specialty diagnostics to continue growing, having planned to acquire transplant diagnostics leader One Lambda for $925 million. The deal is set to close in Q4.

    “One Lambda has great technology. Its human leucocyte antigen and antibody tests are designed to improve the success rate for transplant patients. It's a nice complement to our immunosuppressant assays for monitoring drugs in transplant patients and gives us a comprehensive offering for the transplant testing workflow,” Casper said.

    He added that Thermo is also eager to accelerate One Lambda’s presence in emerging markets—including China, where the company enjoys a 70% market share for its air monitors. Organic sales grew 20+% as the government stepped up implementing new regulations to reduce particulates, and spent more to improve state-run healthcare.

    Illumina’s results were paced by strong growth in consumables, now about two-thirds of total revenues, plus sales of its top-of-the-line HiSeq 2500 sequencing systems, introduced in January. In addition to being available new, the HiSeq 2500 can be purchased as upgrades to the company’s HiSeq 2000 systems. The upgrade accounts for 75% of orders for the 2500, Illumina President and CEO Jay T. Flatley said on his company’s quarterly conference call.

    He said the success of the 2500 helped sales of two single-flow-cell HiSeq sequencers: “We're actually seeing surprisingly good performance in the 1000 and 1500 as well.”

    Qiagen CEO Peer Schatz told analysts that while his company saying it saw growth in all regions and customer classes, much of that growth has been driven by molecular diagnostics (MDx). Other than its HPV test, MDx grew 54% in 2Q from a year ago, reflecting organic sales and acquisitions such as AmniSure in May.

    “There’s a lot of competition that’s emerged in [HPV], and that competition is not just going to compete on automation or clinical data benefit. It’s going to compete on price,” Brian Weinstein, CFA, an analyst with William Blair & Co., told GEN.


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