In the third quarter of 2010, revenues for IBO’s Laboratory Instrument Sales Index grew 8.9% to $5,240.26 million, including a loss of 0.8% from currency. Organic revenue growth was 9.6%, benefiting from increased demand and a weak year-over-year comparison. Asia remained the fastest-growing market. Europe was challenging. Operating profit improved 16.7% to $1,024.83 million, and operating margin jumped 150 basis points to 19.8% of sales due to product introductions, improved operating efficiency and reduced expenses. For the four companies (Analytik Jena, Oxford Instruments, Spectris and Tecan) that did not report earnings before this issue’s publication, estimates are included.

Affymetrix’s third-quarter revenues declined 5.4% to $74.0 million due to the ongoing transfer of its service business to third-party providers. As a result, Service revenue fell 50.2% to account for 7% of sales. Product revenue grew 1.7% to represent 91% of sales, including a decline of 0.2% in Consumables sales to $61.9 million and Instrument revenue growth of 29.8% to $5.4 million. RNA and DNA consumables revenues declined 6% and 1% to $37.5 million and $20.6 million, respectively, and other protein product revenue was $3.8 million. Depressed RNA revenue was attributed to the adoption of lower-priced peg-based array plates, but was partially offset by sequentially higher QuantiGene sales, following the realignment of the distribution channel. DNA revenue benefited from increased demand for Axiom products, half of which were custom orders, but was offset by lower genome-wide association studies. Instruments sales were driven by higher shipments of GeneTitan and GeneAtlas systems. Geographically, European sales improved from the second quarter, but were down year over year. Going forward, the company expects the European market to remain challenging.

Affymetrix’s adjusted operating loss narrowed by 71.5% to $2.0 million due to reduced R&D charges from lower head count and diminished commercialization expenditures. Gross profit margins improved 58 basis points to 54.7% of sales, and product gross profit margins climbed 211 basis points to 55.7% of sales due to a shift in product mix. During the quarter, the company purchased $71.9 million of convertible notes, generating a $4.1 million profit. This will lower interest expenses by $1 million in 2010 and by more than $2 million annually thereafter. For the full year, the company projected a 60% increase in GeneTitan shipments.

Third-quarter sales for Harvard Bioscience climbed 26.0%, 4.6% organically, to $26.5 million (see page 12). Acquisitions contributed 24.7% to revenue growth, while currency reduced sales by 3.3%. Adjusted operating income grew 14.7% to $2.8 million. Gross profit margins declined 120 basis points to 47.5% of sales due to Denville Scientific’s lower gross margins products. During the quarter, the company developed a restructuring plan to reduce head count at Panlab. Excluding currency, fourth-quarter revenues are projected to grow 1%–5% to $28–$29 million.

For the third quarter, Horiba’s Analytical Instruments and Systems revenue increased 4.8% to ¥7,520 million ($87.7 million = ¥85.74 = $1) to account for 27% of company sales. Currency transactions reduced sales by roughly 6%. The company reported strong domestic sales driven by stimulus funding and increased demand in the private sector. As a result, Japanese and Asian sales grew 20.4% and 24.7% to account for 44% and 19% of sales, respectively. US sales improved 2.8% to make up 18% of revenue, while European sales contracted 26.1% to represent 20% of sales due to lower stimulus funding and currency transactions. Segment operating profit jumped 171.4% to ¥502 million ($5.9 million) as overseas manufacturing costs were reduced by a higher yen valuation. The company maintained its full-year 2010 Analytical Instrument and Systems revenue forecast of ¥31,500 million ($342 million) for an expected 3% decline in sales.

Luminex’s quarterly revenues grew 16.3% to $33.9 million (see page 12) due to strong Consumables, Assay and Royalty revenues, which climbed 42.4%, 26.8% and 20.5% to account for 25%, 23% and 17% of total sales, respectively. Consumables revenue benefited from a higher installed base of systems and a weak year-over-year comparison. Assay sales were driven by Cystic Fibrosis and Respiratory Viral Panel product lines. Systems revenue declined 11.8% to make up 24% of sales as the number of analyzers sold declined 10.8% to 231 systems, which included 41 of the new MAGPIX systems. Service contracts and other revenue grew 30.1% to account for 6% of revenues. Operating profit was $0.2 million, compared with a loss of $0.5 million a year ago. Gross profit margins improved seven basis points to 64.5% of sales. Technology and Strategic Partnerships segment revenue grew 11.6% to $24.6 million, and operating income soared 300.0% to $2.2 million. Revenues for the Assays and Related Products segment expanded 30.9% to $9.3 million, while operating loss nearly doubled to $2.0 million. The company lowered the top range of its 2010 revenue forecast by 6% to $138–$140 million for growth of 14%–16%. Fourth-quarter revenues are expected to be flat at $37.6–$39.6 million.

QIAGEN NV’s third-quarter revenues improved 5.6%, 3% organically, to $274.3 million (see page 12). Acquisitions increased revenue growth by 4%, while currency reduced sales by 1.0%. Excluding H1N1-related sales and currency, total revenues grew 14%, or 8% organically. Demand for profiling assays, including the recent launch of the QIAsymphony RGQ in Europe, and prevention assays such as HPV test screening in the Americas contributed strongly to revenue growth. All figures below are at constant exchange rates. Consumables and related revenues grew 10% to account for 88% of total sales, and Instrument sales declined 5% to make up 12%. Molecular diagnostics and pharmaceutical revenue grew 9% each to account for 50% and 20% of sales, respectively. Applied testing revenue improved 20% to make up 7% of revenues, and academia sales were flat to represent 23%. Excluding H1N1-related sales and acquisitions, molecular diagnostics, applied testing and pharmaceutical revenue climbed 13%, 23% and 3%, respectively. Sales to the Americas, Europe and Asia grew 11%, 6% and 4% to account for 53%, 35% and 11% of total sales, respectively. All three major geographic regions grew 15% each, excluding H1N1-related sales. Adjusted operating profits slipped 4.9% to $75.5 million, while adjusted gross profit margins slipped 82 basis points to 65.81% of sales. Despite positive product developments, the company lowered its full-year revenue growth forecast by 4% to $1,090–$1,105 million due to a softer US HPV market.

Bar Graph: Quarterly Sales Performance, January 2007–September 2010

Year Q1 Q2 Q3 Q4

2007 4570 4494 4759 5184

2008 5030 5171 5127 5328

2009 4781 4548 4807 5560

2010 5308 4933 5240

Bar Graph: Quarterly Operating Profit Margins, January 2007–September 2010

Year Q1 Q2 Q3 Q4

2007 16.6% 16.0% 16.7% 18.8%

2008 17.6% 17.2% 18.1% 19.1%

2009 17.4% 17.9% 18.3% 19.7%

2010 19.8% 18.8% 19.8%