Life Technologies (NYSE:LIFE), a manufacturer of instruments and reagents for genetic, molecular, and cellular analysis, formed in November 2008 out of a $6.7 billion merger between Invitrogen Corporation and Applied Biosystems Inc . Life Technologies competes in several scientific analysis fields, but its major segments are genome sequencing and molecular/cell imaging and analysis. Life Technlogies also earns revenue from an array of products and services used in the production of biologic therapies, though this revenue stream can be cyclical, as it is dependent on the approval of biologic therapies by the FDA.
Life Technologies operates under three divisions: Molecular Biology Systems (MBS), Cell Systems (CS), and Genetic Systems (GS). The MBS division manufactures lab tools for genetic and protein research on the molecular level. The CS division manufactures lab tools for studying cell function, such as imaging tools, culture media, stem cells, and drug discovery tools. The GS Division manufactures systems and reagents used to sequence genetic information. Across the entire company, 80% of revenue in 2010 came from sales of consumables used in analyses, while 20% came from instrument sales.
In 2010, revenue growth was driven by Life Technologies' GS and CS divisions. The GS division was driven by 50% growth in sales of its SOLiD sequencing instruments, while the CS division displayed double digit growth in its bioproduction and Dynal beads businesses.
Since the human genome was decoded, genome sequencing technology has advanced at an exponential rate. This rapid technological advance has created a highly competitive industry where new sequencing technologies are quickly obsoleted and prices have been driven down drastically. While a genome cost about $1 million to sequence in 2007, today, genomes can be sequenced for tens of thousands of dollars. Life Technologies' SOLiD sequencing system is one of the Next Generation Sequencing (NGS) systems that are prevalent today. Their Ion Torrent system represents what are called the Third Generation Sequencing (TGS) systems, which will bring the cost to sequence a human genome to even closer to $1000. Life Technologies' ability to keep up with the fast pace of innovation in the genome sequencing market will dictate its ability to compete for market share in this competitive market.
The bioproduction business within Life Technologies' CS division supports the manufacture of biologic drugs through cell culture techniques, a cornerstone of the biotech industry. Revenue in this business is highly dependent on the approval of new biologic drugs by the Food and Drug Administration (FDA) within the greater industry, and can be cyclical for Life Technologies. As new drugs are approved for companies that partner with Life Technologies, revenue for the CS division grows (for instance, 20% growth in 2010). However, as those products mature, unless Life Technologies is able to sell products and services for more freshly approved biologics, revenue growth will stagnate.
Each division of Life Technologies competes with different companies for market share:
Molecular Biology Systems (MBS) and Cell Systems (CS)
Genetic Systems (GS)