The IBO Life Science Index sales grew 8.3% in the third quarter to $2,255 million, compared to 11.2% growth in the same period last year due to declining sales from companies, such as Affymetrix and Caliper Life Sciences and reduced currency effects. Operating profit for the Index climbed 19.3% to $375 million and operating margin gained 150 basis points to 16.6% of sales.

Affymetrix’s third-quarter revenues declined 20.8% to $75.2 million due to lower academic and industrial sales. Product revenue fell 5.4% to $66.0 million, including consumables and instrument sales of $59.8 million and $6.1 million, respectively. Consumables revenue grew 1.3%, with DNA consumables growing 6% and relatively flat sales growth for RNA consumables, which made 40% and 60% of Consumables sales, respectively. Instrument revenue slipped 42.3% due to weaker sales of Probe Arrays systems and GeneChip Scanners. The company shipped 29 GeneChip systems and scanners. Service revenue fell 43.4% to $6.1 million. Slower genotyping services partially offset an increase in instrument-service revenue. Royalties and other revenue dropped 78.5% to $3.1 million, following a particularly strong quarter in the previous year. Adjusted operating loss widened to $12.1 million compared to a profit of $9.4 million, while gross margins declined over 13 percentage points to 49.2% of sales, primarily due to lower licensing fees. The company’s short-term assets remain stable, with cash and total available-for-sale securities of just under $600 million. Affymetrix lowered its full-year revenue guidance by roughly 10% to $408–$415 million, including a one-time $90 million payment (see IBO 1/15/08). Excluding the payment, full-year revenue is expected to decline 12%–14%.

Fiscal fourth-quarter revenues for Becton Dickinson and Company’s BD Biosciences unit grew 15.7%, 11.3% on a currency-neutral basis, to $329.5 million to make up 17.9% of company sales. Revenue growth was driven by strong sales of clinical and research instruments as well as reagents. Cell Analysis sales improved 19.8%, 15.3% excluding currency, to account for 77.0% of unit sales. Discovery Labware sales climbed 3.7% to account for 23.0% of segment revenues, but declined 0.2% on a currency-neutral basis. Sales to the US improved 9.1% to make up 41.5% of segment sales, while International sales improved 20.9% to make up 58.5% of sales.

Full-year revenues for the year ended September 30 for BD Biosciences grew 15.6%, 9.7% on a currency-neutral basis, to $1,195.1 million to account for 16.7% of company sales. Revenue for Cell Analysis jumped 19.1%, 12.8% on a currency-neutral basis, to account for 75.4% of segment sales, led by increased demand for research instruments and flow cytometry reagents. Discovery Labware sales improved 6.0%, 1.2% on a currency-neutral basis, to make up 24.6% of segment sales. Revenues were negatively impacted by lower demand for bionutrient products. International and US sales increased 22.0% and 6.9% to account for 60.6% and 39.4% of segment sales, respectively. In fiscal 2009, BD Biosciences’ revenues are expected to increase 3%-4% to approximately $1,230 billion, including a negative 5% impact from currency transactions.

Third-quarter sales for Biotage AB grew 6.7% to SEK 119.4 million ($18.9 million = SEK 6.32 = $1) from SEK 111.9 million ($16.6 million = SEK 6.74 = $1) a year ago. At constant exchange rates, third-quarter sales improved 13%. Operating profit jumped 40.9% to SEK 13.1 million ($2.1 million) from SEK 9.3 million ($1.4 million), yet gross margins fell 400 basis points to 60.3% of sales due to product-mix changes and lower pricing. Discovery Chemistry sales grew 3.9%, 9% at constant-exchange rates, to SEK 92.3 million ($14.6 million) due to strong sales of consumables, SNAP products and the new Isolera purification system, primarily to the academic and biopharmaceutical markets. However, revenue growth was partially offset by lower demand from major drug companies. Sales to Europe and the rest of the world grew 13.7% and 3.6% to account for 45% and 17% of Discovery revenue, respectively, but sales to the US fell 6.3% to make up 38% of sales. Operating profits for the segment fell 93.5% to SEK 0.6 million ($0.1 million) from SEK 9.3 million ($1.4 million), while gross margins declined 420 basis points to 58.2% of sales due to product mix. Biosystems sales grew 18.9 %, 26% at constant exchange rates, to SEK 27.1 million ($4.3 million), led by strong demand for diagnostic testing, especially for the new PyroMark Q24. Sales to the US and the rest of the world jumped 16.7% and 141.7% to represent 53% and 7% of segment sales, respectively, while European sales fell 17.1% to account for 50% of segment sales. Biosystems operating profit was flat at SEK 6.2 million ($1.0 million), while gross margins slipped 220 basis points to 67.7% of segment sales due to the weakening US dollar.

Caliper Life Sciences’ third-quarter sales fell 7.3% to $34.0 million due to nonrecurring microfluidic-license revenue of $4.2 million in the same period last year. As a result, service and license revenue declined 56.3% to make up 10.3% of sales. Product and service revenues improved 7.9% and 3.8% to account for 58.6% and 31.0% of sales, respectively. Sales of optical molecular imaging products grew 54% to $10.6 million, IVIS instrument sales climbed 29%, while research-product revenue fell 12% to $12.5 million due to lower sales of the LabChip 3000. Revenue for most instrument service segments grew modestly except for Caliper Discovery Alliances and Services, for which revenue slipped 1.7%. Adjusted operating income was a loss of $0.3 million compared to a loss of $0.1 million, while gross margins fell 793 basis points to 43.7% primary to do lower license revenues. Gross margins on product revenue increased 1% to 40% of segment sales, while service gross margins declined 700 basis points due to increased personnel. For the fourth quarter and year, the company anticipates revenues to decline 8%–17% and 5%–7% to approximately $34–$37 million and $131–$134, including recent product line divestitures, respectively.

Sequenom’s third-quarter revenues climbed 17.5% to $11.6 million, including growth for consumables and other product-related revenue of 22.9% and 15.9% to $5.0 and $5.7 million, respectively. Contract services revenue edged up 1.9% to $0.9 million. Overall, revenue growth benefited from increased selling prices and a back order of $2 million. Demand from Asian and Europe remained particularly strong. The company reported sales of 12 MassARRAY systems. Operating loss increased by 84.3% to $10.7 million led by higher R&D expenses as a percentage of total sales. Gross margins soared 630 basis points to 60.9% of sales because of higher consumables sales and prices increases. The company venue lowered its net loss guidance by $3 million to $39 million due to higher acquisition costs and remains confident that it will achieve profitability by 2010–11.

Chart: Quarterly Sales Performance January 2005–September 2008

Q1 Q2 Q3 Q4

2005 1730 1798 1721 1953

2006 1837 1875 1873 2120

2007 2018 2124 2082 2374

2008 2203 2358 2255

Chart: Quarterly Operating Profit Margins January 2005–September 2008

Q1 Q2 Q3 Q4

2005 14.8% 14.6% 14.3% 17.2%

2006 14.5% 13.5% 12.8% 16.2%

2007 14.9% 14.2% 15.1% 18.1%

2008 16.3% 16.2% 16.6%