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Applied
Biosystems Updates Investors at Merrill Lynch
Conference
February
6, 2007--Dennis
Winger, executive vice president & chief financial
officer of Applera Corporation, gave an update on
Applied Biosystems' (ABI) operations at the 2007
Merrill Lynch Global Pharmaceutical, Biotechnology
& Medical Device Conference. During his
presentation, Winger highlighted recent achievements
as well as a number of growth initiatives ABI has been
developing and executing over the past two years.
With
2006 revenues of over $1.9 billion, ABI met nearly 12%
of the total addressable market serviced by three of
its four divisions; Molecular & Cell Biology,
Proteomics & Small Molecule, and Applied Markets
had approximate market sizes for fiscal year 2006 of
$7 billion, $2 billion, and $7 billion, respectively.
Says
Winger, future growth of Molecular & Cell Biology
(with a projected 3-year growth rate of 5–8%) will
be driven by: 1) stabilization of the sequencing
market during the current fiscal year following a
period of decline — the first half of fiscal year
2007 saw 4% growth. Beyond this fiscal year, modest
growth across sequencing is projected; 2) the
continued adoption and utilization of real-time PCR
and TaqMan consumables for purposes of research and
clinical validation; and 3) the ability to leverage
ABI's existing installed base of instruments to
provide more value-added consumables to customers and
capture a greater percentage of the overall workflow.
Growth
across Proteomics & Small Molecule (with a
projected 3-year growth rate of 5–8%) is expected to
be driven by: 1) continued momentum within biomarker
discovery research; and 2) continued demand for
greater sensitivity for the detection of metabolites
in preclinical and clinical studies.
Continued
growth in Applied Markets (with a projected 3-year
growth rate of 10–15%) relies on: 1) further
expansion of ABI's DNA forensic business both
domestically and internationally; 2) continued
development of its quality and safety test business
for environmental and food testing as well as
pharmaceutical QA/QC; and 3) expansion of its
biosecurity business for detection and surveillance of
infectious disease and potentially harmful chemical
threats.
Moving
forward, ABI has many key growth initiatives designed
to continue its momentum. Its primary focus is to
drive growth through providing differentiated
applications based on solutions that its customers
need. In addition, ABI plans to expand its consumables
product lines to drive more sales across its existing
installed base of instruments. Notably, the company is
on track to develop and commercialize a
next-generation sequencing instrument. It will also
continue to expand and cultivate the applied markets
including forensics, quality/safety, and biosecurity.
Finally, ABI will continue to invest in high-growth
emerging markets including China, India, Russia, and
Latin America.
Improved
capital management has increased ABI's ability to
generate cash to the extent that it has more than is
needed to maintain the business, giving it free cash
flow to enable strategic acquisitions and return of
capital to shareholders.
Therefore,
in addition to innovating around existing product
platforms, ABI has become active on the M&A front.
The acquisition of the research products division of
Ambion provides ABI with a leverage point to grow out
its overall consumables business. The company also
acquired Agencourt Personal Genomics' next-generation
technology for DNA analysis, which it plans to
introduce to early access customers in the middle of
this calendar year. The company feels the platform it
is developing from Agencourt's technology will enable
it to maintain its leadership position across the
sequencing market and be useful for gene expression,
genotyping, as well as emerging research applications.
ABI
will continue to expand new market opportunities; it
has been successful in cultivating the global market
for DNA forensics and human identification. Growth in
ABI's forensics business is being driven by the
adoption of DNA databasing through state and federal
legislation throughout the world. For example, ABI has
been working with Chinese government authorities to
help them achieve their goal of having 1.2 million
criminals in their national database by 2008 as well
as their national goal to install more than 300
forensic DNA labs nationwide. Such expansion of the
forensic market in China serves as one example of how
ABI is positioning itself to benefit from the growth
opportunity within these emerging markets.
Year
to date, 57% of ABI's fiscal year 2007 revenue has
been recognized outside of the US. The company will
seek to generate more growth outside of the
US
, and is already seeing increased fiscal 2007
year-to-date revenue growth versus the prior year
period in Europe (up 14%),
Japan
(up 7%), other Asia Pacific countries (up 32%),
Latin America
& other locales (up 29%).
URL: http://www.pharmadd.com/topnews/February
6 2007.asp
Copyright
2007, Cambridge Healthtech Institute. All Rights
Reserved.
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