It was a little more than a year ago that Danaher announced the acquisition of Life Technologies’ MS business and MDS Analytical Technologies, including Molecular Devices (see IBO 9/15/10). The acquisition introduced a new player into the MS market and expanded Danaher’s business in the life science research instrument market. With 2009 revenues in excess of $11 billion and a host of industrial businesses, Danaher brings a relatively different company profile to these markets that have for the most part been the domain of more focused suppliers. It also brought its Danaher Business System, a management process system emphasizing continuous improvement. IBO spoke with Tom Joyce, Danaher’s executive vice president and president of AB SCIEX, Danaher’s MS business, about Danaher’s burgeoning life science research instrumentation business, which also includes Leica Microsystems and Genetix, which Leica acquired earlier this year (see IBO 12/31/09).

Mr. Joyce explained to IBO what attracted Danaher to the life science research instrument markets. “A principal attraction of the life science research markets has been the consistent growth demonstrated across all major regions of the world over the past two decades. Throughout economic cycles, including the major economic crisis of 2008–2009, these markets have proven to be more resilient than many other industrial or consumer markets.” He also emphasized key characteristics of the businesses. “At Danaher, we have a passion for businesses with great brands, strong innovation drivers and multiple opportunities for both organic and inorganic growth. These life sciences businesses clearly have those characteristics, as do many of the other businesses in our portfolio, including our Hach-Lange water analytics business, our Fluke and Tektronix test and measurement companies, and Radiometer, our acute care diagnostics business.”

Through Hach-Lange and Radiometer, Danaher also had experience serving scientists. Danaher entered the life science research market in 2005 with its acquisition of Leica Microsystems AG for $550 million (see IBO 7/15/05). The acquisition added lab microscopes, pathology and diagnostics products, and surgical microscopes to Danaher’s portfolio. For research, Leica offers optical, fluorescence and confocal microscopes.

As Mr. Joyce explained, Danaher’s life science acquisitions cover a broad range of markets. “We have built a strong foundation in instrumentation with wide market access. By this I mean that through microscopy (seeing is often the first step in understanding for scientists); mass spectrometry (what is it that I have here?); microplate readers (how are compounds developing?).”

Mr. Joyce cited Leica when discussing the advantages that Danaher provides its life science research companies. “One of the benefits of being a part of Danaher is that these businesses now have access to capital for nonorganic growth. Leica has done several acquisitions that have strengthened the core business and opened up adjacent market opportunities for growth.” When it was acquired, Leica had $525 million in revenues, operating income of $25 million and an operating margin of around 5%. Since then, Leica has made seven acquisitions, including additions to its research offerings (see IBO 2/29/08, 5/31/08, 1/15/09). The purchases added $225 million in revenue and $30 million in operating income. Today, Leica has revenues of $1.1 billion, operating income of more than $150 million and an operating margin in the low double digits. This year, Leica Biosystems, the business’s histology division, is estimated to have sales of $650 million. Leica Microsystems is expected to generate $400 million in revenue.

Danaher has wasted no time ad­ding to its new research businesses. In their first year as part of Danaher, AB SCIEX and Molecular Devices have both made bolt-on acquisitions. Earlier this year, AB SCIEX acquired Eksigent Technologies’ LC business (see IBO 2/28/10). This summer, Molecular Devices acquired two microplate reader product lines from Beckman Coulter: the SpectraMax Paradigm Platformmultimode readers, and the FilterMax F3 and F5 Series Readers. Both companies have also introduced new products to signature product lines. In May, AB SCIEX launched the TOF 5600 Q-TOF MS (see IBO 5/31/10). In September, Molecular Devices introduced the Ion Works Barracuda Automated Patch Clamp System, calling it the highest-throughput instrument for automated electrophysiology analysis with the lowest cost per data point.

Asked about developments at AB SCIEX since its acquisition, Mr. Joyce told IBO, “AB SCIEX continues to build on its strong market leadership position. . . . We have increased investment in our commercial and technical support teams in the US, Europe and in emerging markets such as China.” He also noted that, “The AB SCIEX team has already seen results in operational performance through the use of various tools of the Danaher Business System [DBS]. In summary, we are very pleased with the progress of the business.” On the management side, former president Laura Lauman has left the company, and Andy Boorn was named chief operating officer. Danaher estimates AB SCIEX’s 2010 revenues will total $475 million.

Updating Molecular Devices’ progress since its acquisition, Mr. Joyce said that, “Molecular Devices has been established as a standalone operating company within the Danaher Life Sciences and Diagnostics segment.” Tom Olenic, vice president of Sales and Service at Molecular Devices prior to its acquisition by MDS, serves as vice president and general manager. “We have strengthened the team globally and continued investment in several exciting new products,“ he said. “We see great opportunities for growth in both the drug discovery and research markets not only in developed countries, but in emerging markets as well.” Danaher estimates Molecular Devices’ 2010 revenues will be $175 million.

IBO also asked Mr. Joyce about the changes at Genetix since its acquisition by Leica. Genetix provides cell analysis research tools as well as cytogenetics systems. “The CytoVision software and Cytogenetics workstations have now been re-engineered to use Leica microscopes and the business is benefiting from the additional market access offered by the much larger Leica Microsystems sales force worldwide.” The CytoVision is designed for cytogenetics laboratory. “In fact, Cytogenetics is now the largest part of the former Genetix business, and the CytoVision product is probably number one in market share in this segment globally.”

Discussing Genetix’s research business, Mr. Joyce told IBO, “Genetix’s ClonePixFL system and Clone Select Imager continue to carve out an important niche market for those developing biologic-based drugs due to the instruments’ ability to select the highest-productive clones much faster than using FACS [fluorescence-activated cell-sorting] techniques, thereby saving valuable time in the pharma innovation process.” New products have also been launched. “Genetix has also launched a new instrument in Q2 designed for high-content screening of DNA in microplates that is an important broadening of the application of imaging technologies in cell biology. Leica is already working with the Genetix engineers to leverage further these imaging capabilities, using Leica extensive imaging and optical know-how to further broaden Genetix’s application fields.”

Asked about the DBS and its advantages, Mr. Joyce stated, “The DBS provides the tools as well as the support teams to assist each business in improving innovation, commercial execution, and manufacturing and supply chain processes. While gaining these advantages, these businesses also retain a high level of operational autonomy.” In further describing the DBS, he said, “The DBS is a common culture that unites our operating businesses and is rooted in our five core values: the best team wins; customers talk, we listen; continuous improvement (kaizen) is our way of life; innovation defines our future; and we compete for shareholders.” The DBS also drives customer orientation. “The intersection of how we measure how well we’re doing with customers is similar to the way they measure our own performance—quality, delivery, cost and innovation.”

Applied to Danaher’s life science research businesses, Mr. Joyce said, “The DBS enables our life science research companies to evolve their businesses to ‘the next level’ of operating performance, which is also essential to maintaining leading market positions by providing flexibility for investing aggressively in leading-edge technology and commercial capacity.” He noted, “We take a thoughtful approach to applying the DBS tools to each business, focusing on the unique opportunities in each business and never taking a ‘cookie-cutter approach.’”