HIV Business Slows BD Biosciences Growth

Fiscal fourth quarter revenue for Becton, Dickinson’s BD Biosciences unit improved 3.6%, or 4.0% excluding currency, to $296 million to make up 9% of company revenues. Growth was driven by demand for high parameter research systems, including the FACSymphony, FACSCelesta and newly launched FACSMelody. Regional sales in the US grew 8.0% to account for 38% of Biosciences revenues. However, International sales, which advanced 1.5% excluding currency, were hampered by continued challenges in the clinical HIV business in Africa. Excluding the HIV business, Biosciences sales would have climbed roughly 6% organically.

For the fiscal year 2016 ending September 30, BD Biosciences sales declined 1.2% to $1,119 million. However, excluding currency, segment sales advanced 1.5% and nearly 3% without the HIV business, driven by the new product introductions mentioned above. US sales expanded 7.9%, while International revenue slipped 2.1% excluding currency to account for 39% and 61% of segment revenue, respectively.

New Products Incite Bio-Techne Sales

For the fiscal first quarter ending September 30, revenue for Bio-Techne’s Biotechnology segment climbed 6% organically. All product lines performed well, especially antibodies, for which sales grew double digits. In addition, combined sales and royalty revenues for multiplex assays also climbed double digits. The company highlighted two new assay products from the acquired Advanced Cell Diagnostics (ACD) business (see IBO 7/15/16), which contributed to the more than 50% sales growth for ACD on a standalone basis. However, the acquisition negatively impacted adjusted operating margin for the Biotechnology segment, which contracted 300 basis points to 48.9%.

For the third consecutive quarter, sales for Bio-Techne’s Protein Platforms segment advanced more than 20%. Most major regions and product lines grew double digits. Growth was particularly strong for the imaging capillary electrophoresis system, Maurice. In addition, Simple Plex revenue soared nearly 150%, led by demand for the automated multi ELISA system, Ella. Demand for the Western Simple product line also remained strong. Following the acquisition of Zephyrus Biosciences in March (see IBO 3/31/16), the company launched its first automated single-cell western blot instrument, for which initial interest and sales surpassed company expectations. Adjusted operating profit for the segment was $0.2 million, compared to a loss of $1.2 million.

For the total company, which includes the non-OEM diagnostic revenue, both Europe and US sales grew in the high single digits, including mid-single and high single growth from academic and biopharmaceutical markets, respectively. Despite pressure on PrimeGene sales as a result of China’s FDA regulatory changes, total sales in China grew nearly 20%. Other Asia regions, such as India and Korea, performed very well, while Japanese sales declined in the mid-single digits. Fiscal 2017 organic sales are projected to grow roughly 6% or slightly higher.

HORIBA Realizes Regional Strength

For the third quarter, HORIBA’s Process and Environmental Instruments & Systems (P&E) sales climbed 8.8% to ¥4.01 billion ($39.2 million = ¥102.38 = $1) to account for 11% of revenues. Excluding currency, P&E sales grew roughly in the high teens, led by vigorous demand from petrochemical customers in the Americas. As such, currency-neutral sales in the Americas soared roughly 50%. In addition, regional sales in Japan grew roughly 24%. Conversely, sales in Asia declined in the low single digits excluding currency due to lower sales of stack-gas and water quality analyzers in China, South Korea and other Asian regions. European sales were also weak, contracting roughly in the high single digits excluding currency.

P&E operating margin expanded 50 basis points to 6.3%. The company maintained its 2016 P&E revenue outlook of ¥16.5 billion ($154.0 million = ¥107.00 = $1), but increased its operating income forecast by 15% to ¥1.5 billion ($14.0 million).

HORIBA’s Scientific Instruments & Systems (SI) sales waned 5.6% to ¥5.77 billion ($56.3 million) to account for 16% of company revenues. However, this decline was prompted by currency translation, as sales improved roughly 7% in local currency. Sales growth in Asia was robust, climbing more than 30% on a currency-neutral basis. Following modest growth in the first half of the year, Japanese sales climbed 24%. Nevertheless, sales in the Americas and Europe, which declined in the high single digits each, were hampered by weak academic funding.

Segment operating profit faded from a modest gain to a loss of ¥177 million ($1.7 million) due to currency headwinds. SI’s full-year revenue and operating income outlook was reduced 4% and 20% to ¥26.0 billion ($243.0 million) and ¥0.8 billion ($7.5 million), respectively.

 Merck KGaA Delivers Sturdy Process Sales

Third quarter sales for Merck KGaA’s Life Science (LS) division climbed 83.1%, 5.7% organically, to €1.39 billion ($1.55 billion = €0.90 = $1) to make up 37% of company revenues. The acquisition of Sigma-Aldrich (see IBO 9/30/14) boosted revenue growth by 77.4%, while currency impact was negligible. Sales were driven by continued strength for bioproduction solutions and demand in Asia. All sales figures below are organic.

Process Solutions sales expanded 10.1%, led by demand for filtration and single-use products. Applied Solutions sales improved 3.3%, as higher sales of biomonitoring products and demand for analytical testing offset lower instrument revenue. Sales for the Research Solution business slipped 0.4% due to weakness in Europe and a strong year-over-year comparison spurred by several large one-time orders.

Geographically, Asia-Pacific sales were highlighted, climbing 9.9% due to strong demand for purification products. Despite mixed business results, European sales advanced 5.5%. Within Europe, Process Solutions sales grew 12.9% but were partially offset by revenue declines in the Applied and Research Solutions businesses. Research Solutions sales were also lower in North America, yet sales for this region expanded 2.8%. Sales in Latin America grew 6.5%, led by strength in biomonitoring and analytical products within the Applied business. Sales in the Middle East and Africa region were roughly flat.

Incited by the acquisition, LS adjusted operating margin jumped 381 basis points to 26.4%. The company maintained its 2016 LS organic sales growth outlook of mid- to high single digits.

Oxford Falls Despite New Products

For the fiscal half year ending September 30, Oxford Instruments sales grew 4.1% to £171.5 million ($225.7 million = £0.76 = $1). However, growth was driven by favorable currency translations following a sharp devaluation of the British pound. As such, currency-neutral sales fell 6.9% due to the completion of a large superconducting wire contract, which reduced sales growth by roughly 4%. Other headwinds included lower US and European academic funding, and continued challenges in industrial markets.

Despite strong growth in China and healthy contributions from new products, organic sales growth for the Nanotechnology Tools division declined 4.9%. Roughly half of this decline was attributed to the transition of Omicron into a joint venture (see IBO 5/31/15). In addition, demand within the Asylum Research business was negatively impacted by weak academic and industrial markets across North America and Europe. Conversely, NanoAnalysis sales were strong, driven by new materials characterization solution offerings for industrial manufacturing applications. Sales in the Andor Technology and NanoScience businesses improved due to greater adoption of Andor’s new 3-D microscopy platform and increased funding for quantum technologies, respectively. Finally, sales in the Plasma Technology and joint venture ScientaOmicron businesses continued to progress.

Industrial Products revenue slumped 14.3% due to lower MRI contracts within the Superconducting Wire business, as well as softness in the metals and construction markets. Nevertheless, sales for the company’s Pulsar benchtop NMR system advanced due to broader adoption in industrial markets as well as higher demand from academic customers. In addition, sales in the X-ray Technology business improved, driven by demand from medical and electronic OEM customers.

Sales in the Service division slipped 0.9%, as higher service sales from the company’s own products, which grew 8%, were offset by lower demand for OEM refurbished imaging systems sold under the HealthCare brand.

Overall, orders grew 5.1% organically, including 15% growth in the Service division. Meanwhile, organic bookings expanded 7% for Nanotechnology Tools, but declined 10% for Industrial Products.

Given the declines in the Superconducting Wire business and weak academic funding, total currency-neutral sales in Europe and North America contracted 4.2% and 14.7%, respectively. Excluding the superconducting wire decline, currency-neutral European sales were flat. Sales in Asia improved 0.7%, as strength in China was muted by weakness in South Korea and other Asian regions.

Oxford Instruments adjusted operating margin declined 106 basis points to 11.1%, as strong currency benefits were offset by lower sales of refurbished imaging systems. The company projected flat fiscal 2017 sales growth as a result of the slower academic funding environment in the US and Europe, as well as declining sales in the health care business.

Pacific Biosciences’ Orders Slow Again

Third quarter sales for Pacific Biosciences jumped 80.5% to $25.1 million. Excluding Contractual revenue, which was level with the previous year at $3.6 million, sales soared 108.5% to $21.5 million. Instrument revenue climbed 424% to $11.5 million, as the company ramped up shipments of its Sequel system. With more than 30 Sequel systems placed during the quarter, the total installed base reached over 75 units. Consumables sales advanced 21%, primarily due to usage of the RS II system. Although supply issues were resolved, demand for Sequel SMRT Cells were below company expectations.

Instrument orders were also disappointing and slowed for the second consecutive quarter. Total instrument bookings amounted to 20 units, resulting in a backlog of more than 40 systems. As communicated in the first half of the year, the company asserted that order delays were affected by the shortage of SMRT Cells. Furthermore, potential customers may be waiting for data generation from early adaptors of the Sequel system.

Gross margin expanded 324 basis points to 50.3%. Operating loss was $16.7 million compared to a profit of $2.6 million due to increased investments. Given the slower order growth, the company lowered its 2016 revenue growth forecast from 70% to a range of 55%–65% growth to $86–$90 million excluding Contractual revenue.

VWR Growth Slows

VWR’s third quarter sales grew 3.7%, 1.6% organically, to $1.14 billion. Currency reduced sales growth by 0.7%, while acquisitions contributed 2.8% growth. Sales were slightly below company projections because of weaker demand for equipment and instrumentation late in the quarter. Growth was further impeded by timing of orders and a stronger year-over-year comparison compared to the first half of the year. Overall, equipment and instrumentation sales declined in the low single digits organically. However, organic sales of chemicals and consumables grew in the mid-single digits and low single digits, respectively.

By end-market, VWR biopharmaceutical sales advanced roughly 3% organically. Bolstered by investment initiatives, government revenue grew approximately 6% organically. Industrial and health care organic sales advanced 2% each, while education sales declined 3%.

Organic sales for VWR’s Americas segment improved 1.7%, led by double-digit growth from government customers. Biopharmaceutical and health care sales advanced approximately 3% and 2% organically, respectively. Industrial sales were roughly flat, and sales to education markets fell 2%. Including acquisitions, consumables, and equipment and instrumentation sales each grew in the low single digits, while chemicals sales climbed double digits.

VWR’s EMEA-APAC sales growth advanced 1.4% organically, hampered by soft education and government sales, as well as lower-than-expected demand for equipment and instrumentation from biopharmaceutical customers. Conversely, industrial sales grew roughly 5%, including strength in the petrochemical, environment, microelectronics and natural resources markets. Furthermore, health care sales expanded 2%. By product, segment sales of consumables improved roughly 4%, equipment and instrument sales slipped 2%, and sales of chemicals were flat.

VWR gross profit margin expanded 30 basis points to 27.6% due to customer mix and improved pricing. Adjusted operating margin slipped 12 basis points to 9.6%. The company confirmed that its full-year sales are projected to reach the low end of its previous guidance of $4.54–$4.63 billion. Fourth quarter revenue growth is expected to mirror the third quarter performance.