First-quarter revenues for IBO’s Laboratory Instrument Sales Index climbed 10.2% to $4,713.32 million, including 3.9% growth from currency transactions. Operating profit improved 23.8% to $871.20 million, and operating margin climbed 200 basis points to 18.5% of sales. Revenues benefited from improved demand and a weak year-over-year comparison, while cost saving initiatives sustained operating profit growth. The only significant modification to the Index this quarter was the inclusion of Spectris’s Materials Analysis segment (Malvern Instruments, PANalytical, Particle Measuring Systems), and the integration of Oxford’s total revenues, following new reporting segments by the company. Financial estimates were provided for Oxford Instruments, Shimadzu and Tecan, which have yet to report first-quarter financial data.

Affymetrix’s first-quarter revenues grew 2.1%, 3.9% on a currency-neutral basis, to $80.2 million. Product sales rose 13.2% to $73.4 million, including Consumable and Instrument growth of 11.1% and 37.9% to account for 90% and 10% of product sales, respectively. The Consumables business’s RNA revenue grew 2.9% to $38.9 million due to demand for biomarker validation, while DNA sales grew 23.0% to $25.1 million, led by strong sales of Axiom genotyping products, and SNP 6.0 and cytogenetic research products. RNA and DNA product sales were negatively impacted by pricing pressure, but biomarker discovery products were most impacted. Instrument sales benefited from sales of GeneTitan and GeneAtlas systems. For the quarter, the company shipped 40 systems. The company reported stable demand from pharmaceutical markets for gene expression and validation. Approximately 60% of product sales were for RNA and 40% were for DNA analysis. The fastest area of growth continues to be Asia, particularly China. Service revenue fell 61.3% to $4.5 million, following the completion of several large genotyping projects in 2009. Royalty and Other revenues improved 6.8% to $2.3 million. Adjusted operating loss narrowed to $2.7 million, compared to a loss of $18.7 million a year ago. Gross profit margin rose over 12 percentage points to 58.8% of sales due to manufacturing consolidation and a shift in product mix. The company anticipated flat growth for the second quarter to $80–$82 million, including a decline in Service revenue of $7–$8 million.

Harvard Bioscience’s first-quarter revenues soared 37.9%, 4.3% organically, to $26.3 million (see page 12). Currency transactions and acquisitions contributed 3.7% and 29.9% to growth, respectively. On a pro forma basis, first-quarter sales grew 5.5%. Direct sales through the company’s catalog and Internet businesses combined accounted for 25% of total revenues. Roughly 68% of sales were from products the company manufactures. Adjusted operating income improved 27.5% to $3.5 million. Gross profit margins declined 74 basis points to 48.6% of sales due to lower margin products following the acquisition of Denville Scientific (see IBO 9/15/09). The company anticipates full-year revenue growth of 27%–30% to $109–$112 million and second-quarter sales growth of 39%–50% to $25–$29 million, including acquisitions.

First-quarter sales for Illumina grew 15.9% to $192.1 million. Product revenue climbed 11.2% to $173.7 million, including Consumable and Instrument sales growth of 10.6% and 13.5% to account for 66% and 33% of product sales, respectively. Consumables revenue was boosted by strong demand for sequencing consumables, which jumped 84% to $20.3 million, due to a higher installed base of Genome Analyzer systems. However, microarray sales fell $9.4 million or approximately 15%–16% to account for more than half of consumables revenue. The decline was attributed to lower demand for whole-genome genotyping arrays, but was partially offset by increased sales of focus-content and methylation arrays. Despite increased revenue for the Infinium BeadChip product lines, the shift in product mix resulted in a lower average selling price. Instrument sales grew 13.5% to $57.2 million due to higher sales of sequencing and microarray systems, which grew by $5.5 million and $1.3 million, respectively. Sequencing instrument sales declined sequentially, following constrained manufacturing capacity in the first quarter and the transition to the HiSeq 2000 system. Microarray sales rose on a sequential basis due to strong iScan shipments. Service and other revenue jumped 93.1% to $18.5 million due to increased maintenance contracts for sequencing systems. For the first quarter, backlog orders climbed 12% sequentially to reach record levels, with an estimated $20–$21 million from stimulus-related orders. Including stock compensation expenses, operating income grew 4.4% to $39.8 million. Gross profit margins improved 240 basis points to 68.8% of sales.

Luminex’s first-quarter revenues jumped 30.1% to $33.3 million due to an increase in bulk consumable sales. System revenue was strong despite a 3% decline in systems shipped during the quarter. Total cumulative systems shipped reach 6,964, up 14% from a year ago. Operating profit soared 136.6% to $3.7 million due to lower operating expenses as a percentage of sales. Gross profit margins fell 24 basis points to 68.5% of sales due to a shift in product mix. Technology segment sales grew 19.5% to $25.2 million, led by strong Consumables and Royalty revenues, which rose 29.1% and 29.2% to represent 39% and 23% of segment sales, respectively. Service contracts and System revenue grew 9.1% and 8.7% to account for 26% and 6% of segment sales. Other revenue declined 4.9%, due to lower grant revenue, to make up 6% of segment sales. Operating profit for the Technology segment rose 22.1% to $4.3 million. Assay segment sales, which predominantly sells diagnostic kits, grew 80.2% to $8.0 million. The segment’s operating loss fell to $0.5 million, compared to a $1.9 million loss a year ago. Luminex forecasted 2010 revenue growth of 14%–23% to $138–$148 million.

In the first quarter, Strategic Diagnostics’ revenues fell 3.1% to $6.7 million. Kit product revenue dropped 7.2% to $2.9 million. Ag-GMO, and Water and Environmental product sales fell 6% and 17% to account for 21% and 31% of segment sales, respectively. Food Safety product sales were flat, to represent 48% of sales. Life Science revenue grew 3.0% to $3.8 million, led by a 61% and 7% increase in sales of custom monoclonal and polyclonal products to account for 29% and 39% of segments sales, respectively. Life Science revenue were partially offset by lower sales of bulk antibody and Genomic Antibody Technology-related products, which fell 22% and 32% to make up 24% and 5% of sales, respectively. Adjusted operating loss narrowed to $0.5 million, compared to a loss of $0.6 million last year due to improved operating efficiencies. Gross margins jumped 370 basis points to 58.8% of sales due to improved manufacturing efficiencies.

Chart: Quarterly Sales Performance January 2007—March 2010

Q1 Q2 Q3 Q4

2007 4073 4064 4229 4671

2008 4514 4625 4535 4680

2009 4276 4178 4345 4967

2010 4713

Chart: Quarterly Operating Profit Margins January 2007—March 2010

Q1 Q2 Q3 Q4

2007 16.2% 15.2% 15.9% 18.1%

2008 16.6% 16.3% 17.5% 18.0%

2009 16.5% 17.3% 17.3% 18.9%

2010 18.5%

IBO Laboratory Instrument Sales Index companies: Affymetrix, Agilent Technologies (Chemical Analysis Group, Life Sciences Group), Analytik Jena AG, Bio-Rad Laboratories (Life Science), Bruker, Dionex, Harvard Bioscience, Horiba (Analytical Instruments), Illumina, Life Technologies, Luminex, O.I. Corp., Oxford Instruments, PerkinElmer, QIAGEN NV, Shimadzu (Analytical and Measuring Instruments), Spectris (Materials Analysis), Strategic Diagnostics, Tecan, Thermo Fisher Scientific (Analytical Technologies) and Waters.