Pharma and Biotech Drive Agilent Growth

Agilent Technologies’ fiscal 2018 fourth quarter revenues included a 1.2% decline and 1.5% growth from currency and acquisitions, respectively. (See Bottom Line.) Consumables, services and informatics accounted for 56% of sales. For the full year, core revenue growth was 7.1%.

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By end-market, pharmaceutical and environmental/forensics led Agilent’s revenue growth, increasing double digits, while the chemical/energy business grew in the high single digits.

Pharmaceutical and biotech sales rose 14% to account for 29% of company sales, with growth in both small molecule and biopharma end-markets. Product lines showing strength included cell analysis and Nucleic Acids Solutions Division (NASD) products.

Chemical/energy sales grew 7% to make up 24% of company sales. Broad-based gains in both the Agilent CrossLab, and Life Science and Applied Markets divisions were led by strong sales in spectroscopy, LC-MS, and supplies and services.

Environmental/forensic sales grew 17% due to broad-based growth across both end-markets. Highlights included strong demand for Cobalt Raman spectroscopy by forensic customers and LC-MS and ICP-MS by environmental customers. This end-market accounted for 12% of company revenues.

Diagnostics and clinical sales increased 1%, which included strong growth for the genomics businesses, offset by soft sales in the pain management market. The market accounted for 15% of company sales.

Sales to academic and government customers increased 10% to account for 10% of company revenues. Sales were driven by strong demand in China and for LC and LC-MS instruments.

Sales to the food end-market were flat with a decline in instrument sales in China. The end-market accounted for 10% of company sales.

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Geographically, Agilent saw broad-based gains across all regions. Chinese sales jumped 16% to make up 56% of Asia-Pacific sales. Chinese sales were led by strong growth in pharma, environmental/forensics, chemical/energy and academic end-markets. There was also improved revenues for the food end-market. The region also passed the $1 billion mark in sales. Other Asia and Japan revenue increased 12%.

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Life Sciences and Applied Market Group revenue growth were broad-based driven by MS, chromatography and cell analysis sales. Sales for the Agilent CrossLab Group included high demand for both services and consumables.

Diagnostics and Genomics Group revenue growth was led by strong product sales for the NASD and genomics division.

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Agilent expected its fiscal 2019 core revenues to total $5.13–$5.17 billion with organic growth of 5%–5.5%. Agilent anticipates a currency headwind of roughly $110 million for 2019; however, the company expects the impact to be softened by M&A, including the recently closed ACEA Biosciences acquisition (see IBO 9/30/18). For first quarter guidance, Agilent forecast a revenue range of $1.26–$1.28 billion with organic growth of 4.5%–5.5%.

Bio-Rad Life Science Revenue Growth Excels Despite Significant RainDance Sales Decrease

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Sales for Bio-Rad Laboratories’ Life Science segment increased high single digits on an organic basis. (See IBO 11/15/18.) The business segment’s revenue growth was driven by a double digit sales increase for its cell biology, digital PCR, Western blot and food safety products. Process media sales were up $8 million. Life Science quarterly revenue rose 8% on a currency neutral basis, and, excluding process media sales, grew about 6.5%. The business segment’s quarterly revenue growth was offset by a $4 million decrease in sales of RainDance products. Excluding currency, Life Science experienced strong sales growth in North America, Europe, China and Brazil. Bio-Rad predicted that sales for Life Science may decline due to a tough comparison in the fourth quarter. The company forecast its full-year revenue to increase 4%–4.5%.

 Protein Sciences Sales Leads Growth for Bio-Techne

Bio-Techne fiscal first quarter revenues grew double digits, led by Protein Sciences, which grew double digits organically. (See IBO 10/31/18.) The company made changes to its segment reporting for the fiscal year 2019. Bio-Techne now reports two business segments instead of three: Protein Sciences, and Diagnostics and Genomics. The Protein Sciences segment is a combination of the Protein Platform and Biotechnology segments. The Diagnostics and Genomics segment consists of the Diagnostics segment and Advanced Cell Diagnostics, which is now referred to as the Genomics division. All references to revenue growth by region or end-market exclude OEM sales which heavily impacted the Diagnostics and Genomics segment and, to a lesser extent, the Protein Sciences segment.

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Geographically, Europe led the way in revenue growth with a reported 10% organic increase. Europe has become the most consistent region for Bio-Techne, averaging double-digit growth for the past two years. The company attributed this trend to its selling model of combining reagents with instruments to the academia and biopharma end-markets. This selling model has been applied to the US which resulted in a 10% organic growth for the region with the academia end-market leading in sales. Chinese sales experienced 30% organic growth with instruments and genomics leading sales. According to Bio-Techne, the trade dispute between the US and China has had minimal impact.1

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Protein Sciences’ revenue growth was experienced across most product categories and geographic regions. Indeed, most product categories experienced double-digit sales increases. The strongest sales for the segment were mostly for protein and cell and gene therapy applications, and the Simple Western and Simple Plex instruments.

Despite having solid sales, Diagnostics and Genomics was affected by the timing of OEM orders. This led to a $1–$2 million revenue fall out. However, the Genomics division reported double-digit growth, led by the RUO end-market for which sales increased 30%.  End-market wise, biopharma sales rose high single digits and academic sales grew in the high teens.

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Fiscal 2019 sales are expected to be in the high single digits on an organic basis. The company’s outlook on newly acquired Exosome Diagnostics (see IBO 06/30/18) regarding its revenue contribution is uncertain due to the pending approval of reimbursement coverage from Medicare and accrual-based accounting not being completed until at least the fourth quarter of fiscal 2019 or first quarter of fiscal 2020. Starting in fiscal year 2020, Bio-Techne hopes the division will begin a trajectory of hitting $150 million in annual revenue in fiscal year 2023.

Bruker’s BSI Revenue Increase Despite Slowdowns in Europe and China

Third quarter Bruker Scientific Instrument (BSI) sales increased to make up 89% of company revenues. (See IBO 11/15/18.) Systems sales grew 5.1% to account for 71% of total revenues, while Aftermarket sales jumped 11.1%.

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All three BSI units reported revenue growth. BioSpin sales rose in the low single digits with growth in the clinical and applied markets, as well as the service business. In addition, both NMR systems and PCI divisions grew modestly.

CALID experienced a revenue increase in the high single digits due to the strong sales for the division’s MS and molecular spectroscopy businesses. Daltonics’ MS revenue experienced strong sales for both microbiology and life science. Biotyper instruments and consumables, and Optics products sales also increased. CALID’s detection sales were sluggish.

Nano sales increased high single digits, which were attributed to the strong academic and industrial research demand for ADVANCE X-ray and nano-analysis products. Other highlights included AXS revenue growth which was driven by demand in both industrial materials research and academic research markets, as well as strong demand for Nano Surfaces and nano-analysis tools. Nano’s semiconductor metrology revenue, which contributed 5% of Bruker’s overall revenue, rose modestly due to sluggish sales of capital equipment in the second half of the year.

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By region, North American BSI sales were up high single digits, while Asia-Pacific sales were up mid- to high single digits. Though BSI orders in China were strong, the region’s revenue was flat. In addition, there was minimal impact of the US-China trade dispute due to most Bruker products sold in China being manufactured in Europe. Bruker estimated that the Chinese tariffs impacted 3% of the company’s overall revenue. Other highlights included overall strong sales in Japan, and increased sales in the academic end-market in the US. On the other hand, Europe’s revenue growth slowed to mid-single digits.

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Bruker updated its full-year revenue guidance to the range of 6.5%–7%, including 4% organic revenue growth, from a previous estimate of 3.5%. Currency is expected to increase revenue growth by 1.5% thanks to the US dollar strengthening in comparison to other currencies, while acquisitions will add 1.5% growth.

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Asia-Pacific and Europe Lead in Process Solutions Sales for Merck KgaA

Merck KGaA Life Science represented 41% of total company sales in the third quarter. (See IBO 11/15/18.) Along with Healthcare, Life Science delivered high single-digit organic revenue growth. The business segment was moderately impacted by negative foreign exchange effects due to Latin American currencies such as the Argentinean peso and the Brazilian real.

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Within the Life Science segment, Process Solutions posted the fastest growth rate, driven by bioprocessing sales in Asia-Pacific and Europe and high demand for biopharmaceutical manufacturing products. Overall, the Process Solutions division experienced a 30% revenue increase in Asia-Pacific. Applied Solutions’ revenue growth was spurred by the Lab Water franchise, which grew 9% organically, thanks to the double-digit sales growth for the Mili-Q IQ platform.

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Research Solutions’ strong sales were attributed to the company’s e-commerce platform, which helped sales in its chemistry and reagents product lines. Overall, the reagents product sales increased in the mid- to high single digits. Geographically, China was the leading region in Research Solutions sales with high single-digit growth.

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The company forecast Life Science sales to grow 7%–8% on an organic basis for 2018, compared to a previous estimate of 5%–6% organic growth.

Currency Headwind and Veterinary Testing Assays Disinvestment Impact QIAGEN Sales

QIAGEN reported solid third quarter sales growth. (See IBO 10/31/18.) All figures mentioned are in constant currency.

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Instrument sales advanced due to high sales of QIAsymphony and the GeneReader NGS platform. Though expected, the recently launched QIAstat-Dx system only contributed less than one percentage point of revenue growth. Despite the initial slow sales, the company is expanding placements of the system in Europe, Asia and Africa. Despite solid sales, instrument sales were not impacted by the company transitioning way from third-party service contracts to QIAGEN instruments. Excluding revenues from third-party contracts, instrument sales growth was 24%.

Consumables and related revenues sales were stable thanks to the high double-digit increase for Molecular Diagnostics, Pharma and Academia customer segments. The Applied Testing customer segment only experienced low single-digit revenue growth. Revenue growth for consumables increased 6%.

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Molecular Diagnostics posted the fastest sales growth among the company’s four customer segments. Strong sales growth was attributed to double-digit growth in instrument sales and high single-digit growth in consumables revenues.

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Applied Test sales were impacted by the disinvestment of some veterinary testing assays; however, the segment’s sales were solid for the human ID and forensic division. Pharma and Academia sales both grew in the low single digits.

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Geographically, in the Americas, the company highlighted double-digit gains for the US and Mexico while Brazil and Canada experienced single-digit gains. These strong gains were spurred by Molecular Diagnostics and Academia sales.

Europe/Middle East/Africa was the region most impacted by the disinvestment of the veterinary assay business. Even though there were stable sales in Germany, Switzerland and Italy, the regions were offset by weak sales in France, the Benelux region and the Middle East. Sales in Turkey were up double digits but were impacted by currency headwinds.

Asia-Pacific sales growth was affected by last year’s South Korean tenders for QuantiFERON-TB. Excluding this, Asia-Pacific sales were up 11%. In addition, China experienced double-digit sales growth and Japan began to show improvement after a lull in sales.

The company fourth quarter sales forecast was increased 6%–7%, with currency subtracting 4% growth. The company maintained its full-year guidance of an increase of 6%–7% with a 1% currency headwind.

Environmental Measurement Instruments Lead Shimadzu Sales

Shimadzu Analytical & Measuring Instruments’ (AMI) first-half 2019 sales rose 6.8% to make up 61% of total company revenues. (See IBO 11/15/18.)

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By product line, revenue growth was led by sales of environmental measurement instruments, particularly in China, but also for spectroscopy and GC sales. Geographically, LC and MS sales showed strength in North America and Europe but sales of both product lines in Japan stalled. China also saw sluggish sales for LC products. Product wise, Q-TOF MS sold strongly but was offset by soft sales of the LCMS-9030, which had high inquiries from customers but were slow to finalize sales. As for GC, geographically, sales rose significantly in China, while product wise, the GC-2030 showed strong sales growth. SP product sales increased worldwide.

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By end-market, sales to the three main sectors remained stable. In the pharmaceuticals/contract analysis/healthcare/foods category, contract analysis sales grew while sales to other fields were slightly sluggish. In the materials/machinery/electrical/automotive category, the materials field had strong sales, but sales decreased for the other fields. In Japan, sales to the academic market decreased. Government demand increased to 40% of sales in China, in comparison to the previous half of 31%. This was attributed to the region’s pending government projects. Also, with China adopting the RoHS 2.0 Directive, demand for Shimadzu EDX and GC/MS systems rose. Sales in the Other category increased due to the expansion of the analytical instrument customer base.

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Sales outside of Japan represented 61% of AMI revenue. Geographically, North American sales rose 13.2% in local currency to ¥22.3 billion ($195.5 million = ¥114.04 = $1). South American sales declined 7.1% in local currency to ¥2.6 billion ($22.8 million). Shimadzu also predicted that the revenue impact of the trade dispute between the US and China would not be felt until next year.

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For fiscal year 2019, the sales growth forecast remains the same with a 9.4% increased bolstered by changes in currency effects.