Life Science Sales Index Growth Amplified by Illumina
Second quarter IBO Life Science Index sales grew 5.1%, 6.0% excluding currency, to $3,568 million. Operating profit jumped 11.2% to $780 million. Illumina’s strong financial performance accounted for roughly half of the Index’s organic sales and operating profit growth. Based on continuing operations, operating margin advanced 100 basis points to 19.6% of sales. Sequenom was removed from the Index this quarter due to the sale of its Bioscience business (see IBO 5/31/14).
Fiscal third quarter revenue for Becton, Dickinson BD Biosciences grew 7.7%, 6.6% excluding currency, to $277 million to make up 13% of company sales. US sales rose 5.1% to account for 34% of segment revenue due to higher instrument and reagent sales and a weak year-over-year comparison. International sales climbed 9.1%, 7.4% excluding currency, to account for 66% of segment sales, benefiting from a weak comparison and strong growth in Western Europe. BD Biosciences gross margin was unchanged as currency benefits were offset by pricing pressure on certain product lines. Segment operating income advanced 13.8% to $66 million.
Biotage second quarter sales grew 3.5%, 3.3% excluding currency, to SEK 120.4 million ($18.2 million = SEK 6.61 = $1) (see page 12). Revenue growth was driven by demand for purification systems, sample preparation products and consumables. This growth was partially offset by slower sales to distributors and order delays in Europe because of supplier issues for peptide systems. Overall, instrumentation, and combined service and consumables sales, accounted for 43% and 57% of revenues, respectively. The strongest growth was recorded in the US and China, which accounted for 43% and 5% of revenues, respectively. EU and Japanese sales declined to make up 34% and 12% of revenues, respectively. Sales to Other regions expanded to make up 6%. Gross margin fell 210 basis points to 54.5% of sales due to product mix and currency. Adjusted operating profit grew 2.6% to SEK 10.8 million ($1.6 million) because of lower operating expenses.
Fluidigm second quarter sales climbed 57.9%, 31.6% excluding the acquisition of DVS Sciences (see IBO 1/31/14), to $27.6 million. Revenue growth was driven by single-cell genomics revenue, strong sales in Asia-Pacific and increased demand from clinical-lab customers, which accounted for 20% of revenues. License and grant revenue accounted for less than 1% of revenues. Instruments sales grew 51.2%, 20% excluding the acquisition, to make up 56% of revenues. System sales were driven by the C1 Single-Cell Auto Prep, partially offset by lower sales of BioMark HD and Access Array systems. Cumulative instrument placements reached 1,147 units, including 666 analytical systems, 481 preparatory instruments and 81 proteomic systems. Consumables sales soared 70.5%, 51% organically, to account for 44% of revenues. Revenue for production-genomics applications grew 65% to make up roughly 45% of Consumables sales. Total sales in the US, Europe and Asia-Pacific grew 39.9%, 69.8% and 194.5% to account for 52%, 27% and 17% of revenues, respectively. Japanese sales declined 7.3% to make up 1%. Sales in Other countries improved 6.3% to account for 3%. Product gross margin expanded 280 basis points to 74.6% of sales due to product mix and increased IFC volume. Adjusted operating loss more than doubled to $9.4 million as a result of higher operating expenses, including stock-based compensation. Fluidigm raised its 2014 organic sales growth outlook by 3% to $94–$96 million for growth of 32%–35%. But the company lowered the bottom of the revenue range for DVS by $2 million to $18–$22 million due to the uncertain timing of order deliveries.
Sales for Luminex Technology and Strategic Partnerships (TSP) grew 7.2% to $33.4 million to account for 60% of revenues. Consumable and System revenues grew 7.5% and 7.6% to represent 37% and 23% of TSP sales, respectively. Royalty and Service revenues grew 10.3% and 11.0% to make up 28% and 7%, respectively. Other revenue fell 15.8% to account for 4% due to lower grant revenue and license fees. System revenue for the company grew 8.6% to $8.3 million. The total number of multiplexing systems sold increased by 2 units to 268. Placements of LX and FLEXMAP 3D systems climbed 14.7% and 118.2% to 148 and 24 units, respectively. Sales of MAGPIX systems fell 23.8% to 96 units. TSP gross profit margin was unchanged at 65.6%, and operating profit rose 34.8% to $8.6 million due to lower R&D.
Excluding Royalty payments, second quarter sales for Merck Millipore declined 1.1% to €658.7 million ($902.3 million = €0.73 = $1) to make up 24% of Merck KGaA sales. Organic Millipore revenue grew 4.0% excluding currency headwinds and the divested Discovery and Development Solution business (see IBO 1/15/14), which lowered sales growth by 4.2% and 0.9%, respectively. Process Solutions (PS) sales grew 8.3% organically to account for 44% of segment revenue, driven by demand for filtration systems and single-use products for biopharmaceutical manufacturing, especially in Europe and emerging markets. PS sales in North America grew 1.4% organically. Lab Solutions (LS) sales improved 0.4% organically to account for 40% of Millipore revenue. LS sales were led by demand for solvents and consumables in emerging markets, mostly offset by weakness in North America and Europe. Bioscience sales grew 2.0% organically to make up 15% and benefited from demand for cell-analysis products from diagnostic labs. Organic Bioscience sales grew 2.5% in North America. Millipore organic sales to Europe, North America and Emerging Markets grew 1.4%, 1.1% and 13.0% to account for 40%, 27% and 25% of sales, respectively. Sales to Rest of the World grew 0.4% organically to make up 9%. Gross profit margin expanded 130 basis points to 58.8% of segment sales due to higher pricing and increased sales volume. Adjusted operating profit advanced 7.1% to €139.9 million ($191.6 million).
Tecan’s half-year sales fell 5.4%, 2.7% excluding currency, to CHF 172.0 million ($193.3 million = CHF 0.89 = $1). Sales were negatively impacted by order delays from two large OEM customers. All sales figures below exclude currency. Instruments, and service and spare parts revenues fell 5.2% and 1.4% to make up 69% and 24% of sales, respectively. Consumables sales grew 9.2% to account for 13%. European and North American sales declined 2.4% and 4.4% to account for 44% and 41% of revenues, respectively. Swiss sales climbed 8.5% to make up 3%. Sales in Asia and Others improved 0.5% and 4.4% to make up 12% and 3%, respectively. Gross profit margin expanded 200 basis points to 50.8% of sales due to product mix and lower cost of goods. Operating profit fell 3.9% to CHF 22.3 million ($25.1 million).
Tecan Partnering sales fell 15.6%, 13.9% in local currency, to represent 41% of sales. Despite increased sales to Dako and growth in China, instrument sales were lower due to the order delays. Components sales were negatively impacted by the year-over-year comparison. Partnering operating profit slumped 54.9% to CHF 11.3 million ($12.7 million). LS sales grew 3.4%, 7.2% in local currency, to represent 59% of sales, led by doubled-digit revenue growth in Europe and good growth in North America. Chinese sales declined. Liquid-handling sales grew in the double digits. LS operating profit soared nearly 14-fold to CHF 14.8 million ($16.7 million) due to increased sales volume and reduced R&D expenses.