“SCIEX has recognized expertise in the field of MS, and Phenomenex in the fields of sample preparation and chromatography. Working together, we are able to provide a complete separation package to chromatographers worldwide. The relationship has included SCIEX shipping mass specs with Phenomenex HPLC columns to new users.”
In a deal that can be expected to shake up the LC aftermarket, Danaher has agreed to purchase Phenomenex, one of the largest private providers of LC columns. The purchase price was not disclosed. Phenomenex also supplies GC and SPE products. Company subsidiaries include proficiency testing firm Phenova and PhenoLogix, an analytical support lab for application development. An estimate by Evercore ISI puts Phenomenex revenues at $200 million. The company has 700 employees and sells more than 7,000 products. The acquisition is expected to close late this year.
Phenomenex will continue to operate as a standalone company, maintaining its brand, personnel and sites. CEO Fasha Mahjoor will remain with the firm, according to Terrell Mathews, senior manager, Marketing, at Phenomenex. “Joining Danaher will allow us to maintain the high pace of innovation that our customers and international distributors have come to expect from us,” said Mr. Mahjoor. “This is our opportunity to further expand our R&D activities, benefit our customers with a more diversified product portfolio and reinforce our market leadership.”
He told IBO, “I am excited about leading Phenomenex into this next chapter of our lives. We have all the opportunities now to be an even greater and more progressive company than before. Danaher has a great track record of buying best-in-class companies and nurturing them so that they become even better.”
Dan Daniel, executive vice president of Danaher, stated, “Phenomenex is a strong business characterized by high growth rates and margins, and excellent growth prospects driven by increasing analytical testing needs in the health, research and environmental segments.”
The purchase marks Danaher’s entry into the highly competitive LC column markets in which Agilent Technologies, Thermo Fisher Scientific and Waters have leading positions, but a number of private specialized providers, such as Restek, as well as larger, publicly held companies, including Merck KGaA, also compete. The acquisition is in line with Danaher’s goal of making consumables a greater percentage of total sales, as such products carry higher margins and provide a steady revenue stream. The typical price of an LC column is several hundred dollars. The list price for a Phenomenex Kinetex 2.6 µm HILIC column is $615 each, according to the company’s website.
The purchase also gives Danaher access to the SPE market, enabling it to provide sample preparation solutions. In addition, the purchase marks Danaher’s entry into the GC column market; again, a market in which Agilent and Thermo Fisher play major roles.
Phenomenex will join Danaher’s Life Sciences platform, part of its Life Sciences & Diagnostics segment. As Mr. Mathews told IBO, Phenomenex will operate as a separate business but will benefit from synergies with other Life Sciences businesses, especially SCIEX, a supplier of LC and MS instrumentation. Both Phenomenex and SCIEX count the pharmaceutical market as a major end-user segment. As Mr. Mathews told IBO, Phenomenex’s primary end-market is small molecule drug development and QC.
However, the area in which the companies have worked together the most is applied markets. Starting in 2012, the companies have collaborated to provide food testing solutions. “We have been working with one of the Danaher operating companies, SCIEX, for many years, primarily in the area of food safety, to provide total method solutions,” explained Mr. Mathews. “SCIEX has recognized expertise in the field of MS, and Phenomenex in the fields of sample preparation and chromatography. Working together, we are able to provide a complete separation package to chromatographers worldwide. The relationship has included SCIEX shipping mass specs with Phenomenex HPLC columns to new users.”
Asked about how the acquisition will affect the agreement, Mr. Mathews told IBO, “With Phenomenex being an independent operating company within Danaher, we hope to expand this program to areas outside of food safety. However, because both companies will operate independently, we are also able to work with other manufacturers in the space.” But he emphasized, “Phenomenex will always remain instrument agnostic, providing separation science products and method development support to all chromatographers regardless of the instruments they utilize.”
Phenomenex’s synergies with Danaher businesses extend beyond SCIEX. “If it is beneficial to our customer to provide a greater breadth of products, then we will do so,” commented Mr. Mathews. “There are several companies within the Danaher umbrella that we do have synergies with. Among the companies in Danaher’s Life Sciences segment, Phenomenex shares end-markets, including food and pharmaceutical labs, with Pall, which provides filtration and process chromatography products.”
Outside of the Life Sciences & Diagnostics segment, other shared markets include environmental testing, according to Mr. Mathews. Phenomenex’s Phenova business specializes in environmental proficiency testing, while Danaher’s Hach business provides products for water quality testing and analysis. “Phenova and Hach are both servicing water testing laboratories, and working together they may be able to provide extended value-added service,” he explained.
Phenomenex will also implement the Danaher Business System (DBS), a system for continuous improvement of operational and business processes, according to Mr. Mathews. “We are looking forward to learning of, and putting to use DBS that has been so instrumental in the success of the Danaher companies.” He added, “We can see how acceptance of this system would accelerate product development and improve our standing as a world class manufacturing company.”
In fact, Phenomenex has evaluated the potential benefits of DBS. “We have spoken to other companies, during the due diligence process, that are under the umbrella of the Life Sciences group. They’ve all given us incredible feedback on what that Danaher Business System has done for their own growth in terms of optimizing efficiencies even further,” noted Mr. Mathews. “It’s not just another lean program. It really helps with creating an overall company strategy and direction, and then rolls out policy around that and continually tracks the deployment of that policy.”
In addition to the efficiencies DBS could bring, Danaher’s scale could allow for new investments by Phenomenex. “We also foresee Danaher being able to help us reduce some of our raw material costs and possibly add new technologies to our sales channel.” He noted that Phenomenex’s current distribution network will remain in place.