First-quarter 2009 Life Science Index sales declined 3.1% to $2,157 million, while operating profit slipped 0.8% to $356 million. However, operating margin gained 50 basis points to 16.6% of sales due to restructuring and cost saving initiatives. Of the 16 Index companies, Genetix and Tecan are the only two companies for which first-quarter estimates have been used.

Affymetrix’s first-quarter revenues slipped 1.3% to $78.6 million, but grew 2.2% on a currency-neutral basis, excluding a one-time $90 million intellectual property payment last year. Product revenue improved 3.3% to $64.9 million. Instrument revenue grew 28.9% to account for 8% of sales. The company shipped 26 GeneChip systems and scanners for a cumulative total of 1,840. Consumables sales improved 1.5% to make up 92% of sales. Panomics (see IBO 11/15/08) contributed 6% growth to consumable sales, which were partially offset by lower demand for probe arrays. DNA consumables revenue declined 4% to $20.3 million, while RNA consumables revenue grew 3% to $37.9 million. Service revenue soared 37.2% to $11.6 million led by a 39.2% jump in genotyping services revenue, while Royalties and other revenue fell 74.4% to $2.1 million, excluding the intellectual property payment. The company completed its transfer of array manufacturing to Singapore and initiated distribution from its US distribution center. In the subsequent quarter, reagent manufacturing will be consolidated and instrument manufacturing will be outsourced. All transitions are projected to save the company $20–$25 million in annual operating expenses. Adjusted operating loss widened to $18.7 million compared to $5.6 million, while gross profit margins fell over 13 percentage points to 46.5% of sales due to higher product charges associated with the transition of facilities. Second-quarter revenues are projected fall 10%–13% to $75–$78 million, with gross margins of around 49% of sales.

First-quarter sales for Beckman Coulter’s Life Sciences segment fell 14.8%, 10.0% on a currency-neutral basis, to $94.2 million to account for 13.6% of total revenues. Sales growth was adversely affected by strong sales in the previous year and lower capital expenditures, resulting in a 20% decline in cash instrument sales. Operating profits fell 62.3% to $4.0 million, despite lower operating expenses.

Fiscal second-quarter revenue for Becton Dickinson’s BD Biosciences grew 3.3% to $303.8 million to make up 17% of company sales. Foreign-currency transactions increased revenue growth by 1%. US sales fell 9.2% to account for 34% of segment revenues, while international sales grew 11.3%, 10.1% on a currency-neutral basis, to make up 66%. Revenue growth benefited from demand for research instruments and reagents, primarily in Western Europe and Japan. Sales were partially offset by lower demand from academic and biotech markets, primarily in the US. Cell Analysis revenue improved 5.1% to $231.0 million, while Discovery Labware revenue slipped 2.1% to $72.8 million. Operating income for the segment climbed 9.7% to $92.1 million, and operating margins climbed 177 basis points to 30.3% of sales.

First-quarter sales for Biotage AB climbed 12.0% to SEK 99.6 million ($11.8 million = SEK 8.41 = $1) from SEK 88.9 million ($14.2 million = SEK 6.27 = $1). At constant exchange rates, sales declined 9%, and in US dollars, sales fell 16.9%. Adjusted operating profit improved 49.5% to SEK 1.8 million ($0.2 million), while gross profit margins declined 400 basis points to 56.9% of sales due to pricing competition and geographic mix. European and US revenues represented 41% and 38% of sales, respectively. The Biosystems business, which was divested in October 2008 (see IBO 10/15/08), contributed sales of SEK 2.5 million ($0.3 million) and an operating profit of SEK 0.3 million ($35,000).

Caliper Life Sciences’ first-quarter sales declined 2.8% to $28.5 million, but increased roughly 1.2% on a currency-neutral basis. Organic sales climbed 11% to $28.1 million. Based on continuing operations, Research revenue grew 9.0%, 15% organically, to make up 47% of sales, led by demand for the LabChip GX and Profiler Pro reagent plates. LabChip GX sales doubled to 22 units, bringing the number sold to over 60. Imaging revenues improved 9.9%, 15% organically, to represent 38% of sales. IVIS sales grew 15% organically. Caliper’s Discovery Alliances and Services (CDAS) sales declined 7.1% to make up 16% of sales. Adjusted operating loss narrowed to $4.6 million from a loss of $7.7 million due to lower operating expenses. Gross profit margins declined 124 basis points to 39.1% of sales due to lower service revenues. Second-quarter revenue is expected to be flat at $28–$31 million, including a 4% and 2% decline in Research and CDAS revenues, respectively, and Imaging revenue growth of 5% organically. Full-year organic revenues are anticipated to grow 4%–7% to $141 million, including 4%, 10% and 2% growth for the Research, Imaging and CDAS, respectively.

First-quarter sales for QIAGEN NV grew 6.7%, 16% on a currency-neutral basis, to $220.9 million. Consumables sales rose 2%, 10% on a currency-neutral basis, to make up 89% of revenues. Instrument revenues grew 68%, 93% at constant exchange rates, to account for 11%. Instrument sales benefited from new products. Other sales, primarily services, declined 53%, 46% at constant-exchange rates, to represent 1% of sales. Sales to the molecular diagnostics market jumped 18% to make up 46% of sales due to demand for HPV screening. Sales to the applied testing, life science research and pharmaceutical markets accounted for 7%, 27% and 20% of sales, respectively. Sales to the Americas, Asia and Rest of the World climbed 10%, 27% and 88%, to represent 51%, 12% and 3% of sales, respectively, while European sales declined 6%. At constant exchange rates, sales to the Americas, Europe, Asia and Rest of the World rose 12%, 13%, 23% and 157%, respectively. Adjusted operating income climbed 0.4% to $56.9 million. Adjusted gross profit margins fell 114 basis points to 72.3% of sales. Second-quarter revenues are expected to grow 14%–18% to $225–$235 million.

Sequenom’s first-quarter sales fell 17.8% to $8.7 million due to a 30.5% decline in system-related revenue to make up 36% of sales. Lower capital spending from research, pharmaceutical and academic markets negatively impacted segment sales, which led to a 35.1% drop in MassARRAY system hardware sales to $2.4 million. For the quarter, nine MassARRAY systems were sold. Service revenue fell 38.3% to account for 10% of sales, while Consumables revenue improved 1.3% to account for 54% of sales, benefiting from increased demand for MassARRAY Compact. Operating loss more than doubled to $17.8 million due to higher R&D and SG&A expenses, while gross margins improved 476 basis points to 60.6% of sales due to favorable product mix. Full-year Genetic Analysis revenue guidance was lowered by 34% to $32–$35 million for a 29% decline.

Life Science Index, Total % Change

2006 2007 2008 2009 06/07 07/08 08/09

Total Annual Revenues ($M) 7705 8624 9409 —- 11.9% 9.1% —-

1st Quarter Revenues ($M) 1837 2018 2226 2157 9.8% 10.3% -3.1%

Annual Oper. Profits ($M) 1102 1347 1556 —- 22.2% 15.5% —-

Annual Oper. Profits (%) 14.3% 15.6% 16.5% —- —- —- —-

1st Quarter Oper. Profits ($M) 266 301 358 356 13.0% 19.1% -0.8%

1st Quarter Oper. Profits (%) 14.5% 14.9% 16.1% 16.5% —- —- —-

Chart: Quarterly Sales Performance January 2006–March 2009

Q1 Q2 Q3 Q4

2006 1837 1875 1873 2120

2007 2018 2124 2106 2376

2008 2226 2442 2335 2406

2009 2157

Chart: Quarterly Operating Profit Margins January 2006–March 2009

Q1 Q2 Q3 Q4

2006 14.5% 13.5% 12.8% 16.2%

2007 14.9% 14.2% 14.9% 18.1%

2008 16.1% 15.6% 16.3% 18.1%

2009 16.5%