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Life Technologies Corp (LIFE) |
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WIKI ANALYSIS
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 [1]. 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.
Business Segments[2]
- Molecular Biology Systems - 48.1% of net sales (6% growth)
- Genetic Systems - 26.4% of net sales (10% growth)
- Cell Systems - 25.2% of net sales (13% growth)
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.
Business Growth
FY 2010 (ended December 31, 2010[3]
- Net revenue increased 9.4% to $3.59 billion.
- Net income increased 162% to $378 million.
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.[4]
Trends and Forces
Technology in the Genome Sequencing Industry is Advancing at a Fast Pace
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.[5]
Life Technologies' Bioproduction Business Depends on Overall Biotech Growth
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.[6]
Competition
Each division of Life Technologies competes with different companies for market share:
Molecular Biology Systems (MBS) and Cell Systems (CS)
- General Electric Company (GE): A conglomerate company whose subsidiary, GE Healthcare, is a market leader in molecular imaging products.
- Agilent Technologies (A): Markets an array of chromatography systems used for molecular measurements.
- Beckman Coulter (BEC): Markets several cell and molecular analysis systems.
- Millipore (MIL): Markets antibody, cell culture, and imaging products.
Genetic Systems (GS)
- Illumina (ILMN): Leads the genome sequencing market with its HiSeq and Genome Analyzer systems.
- Roche Pharmaceuticals (RHHBY): Roche subsidiary, 454 Life Sciences, is a strong competitor in the genome sequencing market with its Genome Sequencer brand.
References
- ↑ Applied Biosystems, Invitrogen complete $6.7 billion merger
- ↑ LIFE 2011 10K
- ↑ Life Technologies Announces Fourth Quarter and Fiscal Year 2010 Results
- ↑ Life Technologies Posts 7 Percent Q4 Revenue Growth
- ↑ The Next Generation In Genome Sequencing
- ↑ Life Technologies' CEO Discusses Q4 2010 Results - Earnings Call Transcript
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