Recently, Life Technologies Corporation (LIFE) launched its first United States Department of Agriculture (USDA) approved, real-time polymerase chain reaction (PCR) test kit named Applied Biosystems VetMAXTM-Gold SIV Detection Kit. This is the first USDA-licensed PCR solution in the biotechnology tools market, capable of detecting a wide range of Swine Influenza Virus (SIV) including H1N1.
Life Technologies is favorably positioned in the life sciences market. The Molecular Biology Systems (MBS) division is its key revenue driver, contributing 74% of the company’s total revenue during the first quarter of fiscal 2011. MBS includes molecular biology-based technologies including basic and real-time PCR, RNAi, DNA synthesis, thermo-cycler instrumentation, cloning and protein expression profiling and protein analysis.
During the first quarter of 2011, the MBS division reported a 1% annualized decline in revenues to $426 million while organic revenue (excluding the impact of acquisitions and at CER) declined 3%. Strong demand for TaqMan assays was offset by slower growth in the PCR and Molecular Biology Reagent businesses, both of which faced a difficult year-over-year comparison and were negatively impacted by reduced consumables demand in Japan. This was primarily due to the shut down of major customer laboratories in the last few weeks of the quarter.
However, the company is primarily focused on developing innovative products, weighed toward high-margin consumables. During the last reported quarter, the company introduced more than 20 new consumable products including an addition to the TaqMan family of products, designed to detect mutations in cancer-related genes. The company expects the new VetMAXTM-Gold SIV Detection Kit to be beneficial for life scientists and contribute to the company’s top-line growth going ahead.
Moreover, Life Technologies is increasing its focus on emerging markets, which bode well for long-term growth. We are also impressed by Life Technologies’ acquisition of Ion Torrent, which is expected to contribute significantly to the top line going forward. Earlier this month, the company opened its India Distribution Center (IDC) in Bangalore to cater to its customers in the South Asian Region.
The company is also adopting several strategies to improve its operating efficiency going forward. However, the company faces stiff competition from major players like Qiagen (QGEN) and Illumina (ILMN). Moreover, Life Technologies earns more than 50% of its revenues from international operations thereby exposing the company to unfavorable currency movement. We are currently ‘Neutral’ on Life Technologies.
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