Solid 1Q Life Science Sales Index Growth
First-quarter 2011 Life Science Index sales grew 6.9%, 5.7% on a currency-neutral basis, to $3,074.88 million. Revenue growth for several companies was lessened by the natural disaster in Japan and strong year-over-year comparisons as a result of stimulus spending in the US and Japan. Operating profit improved 9.6% to $667.16 million, and operating margin gained 10 basis points to 22.2% of sales. Two changes were made to the Index: the removal of Beckman Coulter’s Life Sciences segment due to the pending acquisition by Danaher (see IBO 2/15/11), and the addition of Merck Millipore. Of the 15 Index companies, Tecan was the only one for which first-quarter estimates were used.
Fiscal second-quarter revenue for Becton Dickinson BD Biosciences grew 4.1%, 0.4% at constant currency, to $335.3 million to make up 17% of company sales. Revenue growth fell 3.0% as a result of the natural disaster in Japan and 8.3% due to one-time orders a year ago, including H1N1-related revenue, and US and Japanese stimulus spending. Excluding these factors, sales grew 12%, driven by strong demand for Cell Analysis instrument and reagent products. All figures are expressed at constant exchange rates. Sales to the US grew 2.5% to account for 36% of segment revenue, but growth was suppressed by stimulus revenue in 2010. International sales declined 0.8% but jumped 15% excluding one-time factors and orders. Cell Analysis revenue grew 1.7% to $255.5 million, including a 0.5% decline in International revenue to account for 68% of segment sales, and US sales growth of 6.2%. Discovery Labware revenue declined 3.3% on a currency-neutral basis to $79.8 million, including 4.9% and 1.6% declines in US and International sales to represent 46% and 34% of segment revenue, respectively. BD Biosciences operating income sank 2.0% to $95.2 million, and operating margin dropped 180 basis points to 28.4% of sales. Full-year currency-neutral Biosciences sales are projected to grow 4%–5%, 7% excluding one-time orders and stimulus funding from a year ago, to $1,325 million. The forecast includes 1% growth from the acquisition of Accuri Cytometers (see IBO 2/15/11), which was completed on March 18.
First-quarter sales for Biotage grew 7.3%, 16% on a currency-neutral basis, to SEK 107.2 million ($16.5 million = SEK 6.48 = $1) (see page 12). Revenue growth was driven by acquisitions, as well as by strong sample preparation sales, which grew 10% to represent the largest product category. Orders of instruments, consumables and service products during the quarter were strong. Overall, US and European sales represented 37% and 33% of revenues, respectively, and sales to the rest of the world accounted for 30%, including a 33% increase in Japanese sales. Operating profit dropped 43.9% to SEK 2.6 million ($0.4 million) due to currency. Gross profit margin slipped only 30 basis points to 58.7% of sales as the adverse currency impact was countered by favorable product mix.
Based on continuing operations, Caliper Life Sciences’ first-quarter sales jumped 36.7%, 26% organically, to $35.8 million. Acquisitions and currency added 10% and 1% to revenue growth, respectively. Imaging revenue jumped 44.1% to represent 54% of sales, including 25% organic revenue growth for IVIS products and 19% growth from the acquisition of Cambridge Research & Instruments in December 2010 (see IBO 12/15/10). Research revenue improved 22.4% to make up 40% of sales. Within the Research business, LabChip and Automation product line sales grew 30.4% and 11.3% to account for 25% and 15% of company sales, respectively, due to strong demand for next-generation sequencing and genomics applications. LabChip revenue further benefited from strong sales to molecular diagnostic customers and expanded OEM business with Agilent Technologies.
Discovery Alliances and Services (CDAS) sales soared 93.5% to make up 6% of sales due to recognized revenue from the EPA ToxCost contract. Adjusted operating loss widened by 18.9% to $0.5 million following elevated sales and marketing efforts. Adjusted gross profit margins improved 345 basis points to 53.1% of sales as a result of favorable product mix and higher service revenue. The company forecasts 2011 revenue to grow 15%–22% to the mid-range of $142 million, including 7%–9% growth from acquisitions and average revenue growth of 26%, 10% organically, for the Imaging business, 17% for Microfluidics, 7% for Automation and flat growth for CDAS. Second-quarter sales are expected to grow an average of 24% to $33–$36 million.
First-quarter sales for QIAGEN were flat but declined 2% excluding currency to $264.3 million. Revenue growth was reduced by 2% due to the Japanese earthquake and distribution delays in Egypt. All figures listed below are at constant exchange rates. Consumables and related revenues declined 1% to make up 87% of sales. Instrument revenue fell 9% to account for 13%, following robust sales growth of 37% a year ago. Molecular diagnostics revenue declined 2% to make up 44% of sales due to issues in Japan and Egypt and lower US HPV sales. The decline was offset by higher companion-diagnostic sales in Europe and increased demand from pharmaceutical companies. Academia revenue slipped 2% to represent 29% of sales. Applied testing revenue fell 13% to account for 6% of sales due to the strong year-over-year comparison. Sales to pharmaceutical customers grew 2% to make up 21% of revenue, led by increased demand for molecular applications. Overall, sales to the Americas grew 1% to make up 47% of sales, sales to Europe/ Middle East/Africa slipped 1% to represent 35%, and Asia-Pacific/Japanese sales contracted 10% to account for 18%. Adjusted operating profit shrank 6.3% to $66.5 million due to higher sales and marketing expenses. Adjusted gross profit margin improved 67 basis points to 72.2% of sales. Despite a slow start, the company reaffirmed its full-year outlook of organic revenue growth of 5%–7%.
Sequenom’s first-quarter revenues grew 27.3% to $13.5 million (see page 12), led by increased placements of MassARRAY systems and higher diagnostic-testing revenue. Adjusted operating income declined 22.4% to $13.1 million. Gross profit margin soared nearly 13 percentage points to 62.9% of sales due to timing of diagnostic revenues and favorable product mix. Sales for the Genetic Analysis segment grew 13.8% to represent 88% of revenues. MassARRAY system revenue grew 31.4% to account for 34% of total sales, while related maintenance contract revenue fell 7.7% to account for 9%. The firm placed 13 MassARRAY systems during the quarter. Consumables and service revenues grew 3.1% and 45.1% to make up 39% and 5% of sales, respectively. Genetic Analysis operating profit grew 85.4% to $3.9 million. Diagnostic segment sales grew 716.7% to represent 12% of sales due to the timing of fibrosis carrier-screening test revenue. Segment operating loss narrowed by 17.5% to $7.4 million.
Quarterly Organic Sales Change , January 2008–March 2011
Year Q1 Q2 Q3 Q4
2008 6.8% 9.2% 7.1% 2.7%
2009 3.6% 0.9% 1.9% 5.8%
2010 9.4% 8.6% 8.8% 6.3%
2011 5.7%
Quarterly Operating Profit Margins, January 2008–March 2011
Year Q1 Q2 Q3 Q4
2008 18.2% 18.1% 18.8% 21.1%
2009 19.2% 20.2% 21.4% 22.8%
2010 22.1% 22.8% 22.4% 23.4%
2011 22.2%
Life Science Index, Total % Change
2008 2009 2010 2011 08/09 09/10 10/11
Total Annual Revenues ($M) $11,077 $11,268 $12,191 ----- 1.7% 8.2% -----
Annual Oper. Profits ($M) $2,105 $2,321 $2,673 ----- 10.2% 15.1% -----
Annual Oper. Profits (%) 19.1% 21.0% 22.7% ----- ----- ----- -----
1st Quarter Revenues ($M) $2,576 $2,565 $2,876 $3,075 -0.4% 12.1% 6.9%
1st Quarter Oper. Profits ($M) $466 $478 $609 $667 2.4% 27.4% 9.6%
1st Quarter Oper. Profits (%) 18.2% 19.2% 22.1% 22.2% ----- ----- -----
