Merck KGaA and Sigma-Aldrich

Consolidation continued in the lab-products market, as less than a year after Thermo Fisher Scientific’s purchase of Life Technologies (see IBO 2/15/14), Merck KGaA announced a $17 billion deal to buy Sigma-Aldrich (see IBO 9/30/14). The deal highlights the importance of scale and diversification and transforms Merck/EMD Millipore into a major player in several market segments.

Bruker and Agilent Exits

What had been opportunities created by Agilent Technologies’ purchase of Varian (see IBO 7/31/09) ended as blemishes on the balance sheets of Agilent and Bruker. Bruker had purchased the inductively coupled plasma–mass spectrometer and selected GC businesses that Agilent was required to divest (see IBO 8/15/14), but entrenched competition and operating losses led to Bruker’s sale of most of the assets, underscoring the difficulty of entering new markets. Agilent discontinued its NMR business (see IBO 10/15/14), also done in by a lack of profitability as well as a soft market, indicating the unique challenges of the NMR market.

Illumina’s Resilience

Illumina posted its 10th straight quarter of over 20% revenue growth, capitalizing on its leadership in next-generation sequencing (NGS) and NGS’s transition into diagnostics applications. The firm expanded the market through new products, such as the HiSeq Ten, and partnerships with testing labs (see IBO 3/31/14) and drug makers (see IBO 8/31/14). It also proved adept at market segmentation and product upgrades, while developing future market opportunities.