At the JP Morgan Conference earlier this month, two European firms discussed the diversification of their businesses, illustrating the ongoing trends among lab tool providers to expand into diagnostic markets, utilize product development across multiple offerings and strengthen OEM sales.
From 2007 to 2011, British firm Abcam has expanded from an antibody distributor to a manufacturer of antibodies and immunoassays for both the research and diagnostics markets. Currently, 45% of the company’s products are self-manufactured. This, along with five acquisitions, has driven revenue growth. In the first half of fiscal year 2018 ending December 31, 2017, the company estimates constant currency sales rose 11% (see Third Quarter Results: BD, Bio-Rad, Biotage and Shimadzu).
In his presentation, Abcam CEO Alan Hirzel highlighted the company’s use of data analytics to meet customers’ current and future product needs. “We’re an intensively data rich company, and the data sources are multiple. One of the most important is data about customers, researchers out in the field: what they are looking at, what they are looking for, what they browse on our website, what they chose to buy, what they don’t chose to buy, how they engage with email marketing content.” Such data is also used to predict future research needs as well as potential customers for such products.
Because of the thousands of proteins available against which to develop antibodies, data analytics is integral to product development. “Probably the most important strategic decision we make each year is what we offer,” noted Mr. Hirzel. The company launches 5,000–8,000 new products per year. In total, Abcam offers over 100,000 products. This includes 11,300 recombinant antibodies produced by the company itself. Examples of what he termed “high-value” antibody targets that have increased sales are the PD-L1 checkpoint inhibitor and NeuN protein for immune-oncology and neuroscience research, respectively
Part of Abcam’s growth has been its expansion into adjacent markets. Although primary antibodies for research applications represent 92% of revenues, the company has launched other protein-based reagents for research. This is most evident in the company’s addition of proprietary immunoassays based on its antibodies, with the company having evolved from a distribution to self-manufacturing model. Today, immunoassays account for 6% of Abcam revenues, resulting both from commercial and OEM sales. Immunoassay sales grew fivefold from 2014 to 2017. Other examples of adjacent products are cellular activity kits, epigenetic kits and proteins, peptides and lysates.
Expansion has also encompassed new end-markets. In recent years, offerings have been extended to the diagnostics market, where Abcam makes proteins for use by clinical diagnostics companies in their product lines, such as for immunohistochemistry and companion diagnostics, and immunoassays for screening. “It is very early days for us in terms of our commercial development providing antibodies for applications that are in clinical use,” said Mr. Hirzel. Current partners include Dako (Agilent Technologies), Epic Sciences and NanoString Technologies. Abcam retains the right to sell the antibody for research use. In addition, Abcam is targeting development of antibodies for therapeutics use.
Another company expanding its product lines and end-markets is Swiss firm Tecan. In the first half of 2017, sales rose 3.4% organically to CHF 253.3 million ($259.8 at CHF 0.98 = $1), as organic revenue for the Life Science business jumped 9.5% and Partnering sales declined 2.6% organically.
Sixty percent of Tecan’s products serve research and applied customers, primarily through the Life Science segment, while 40% serve diagnostics customers, who are largely supplied by the Partnering business. Consequently, the diagnostics business is primarily an OEM business, with partnerships with companies such as Abbott, Dako and Ortho Clinical Diagnostics for platform development.
From its core business of providing lab automation systems and components, the company has gradually expanded into adjacent markets such as sample preparation products, cell biology and imaging technology, according to Dr. David Martyr, CEO of Tecan. In his presentation at the Conference, he highlighted customers’ needs when using such technologies for offerings that encompass more than automation.
In line with meeting these needs is Tecan’s emphasis in recent years on consumables for selected applications in both the life science research and diagnostics markets. The consumables offerings complement automation offerings, creating a total solution. In 2016, recurring revenue consisting of plastic consumables, reagents and functional consumables (including SPE), and service and spare parts accounted for 38% of Tecan’s revenues.
New product offerings for consumables have been fueled by acquisitions. Tecan has completed 4 acquisitions in the past 3 years. Examples include the 2014 acquisition of IBL International, a provider of immunoassays for research and diagnostic kits for specialty diagnostics (see IBO 7/31/14). Dr. Martyr disclosed that since the purchase Tecan has automated 84 IBL assays on its platforms.
Another acquisition, SPEWare (now Tecan SP), provides SPE products for MS sample preparation (see IBO 8/31/16). In 2018, Tecan SP products will be launched in Asia, following their introduction in Europe last year. Commenting on the motivation for this purchase, Dr. Martyr said, “We were seeing a lot of demand for fully automated instrument platforms for mass spec sample analysis, particularly going into the large reference laboratories.” As a result of the purchase, last fall, Tecan launched the RESOLVEX brand of instruments and reagents for MS sample prep.