By John Russell
September 23, 2009 | Like many others, Beckman Coulter is betting the mainstreaming of genomics-based research and the future growth of personalized medicine will create a large, robust market for genomics services. Last March, the services giant purchased Cogenics and combined it with DNA sequencing specialist Agencourt Bioscience, acquired earlier, to create Beckman Coulter Genomics (BCG). As research and medical communities rush to dig gold from mounting genomics data, BCG hopes to sell the needed picks and shovels.
“If you start with the Cogenics business model, you really go to a biobank and partner with research partners or clinical partners to be able to bring samples in, to process them to do DNA and RNA extraction, to bank the nucleic acids, and then to perform a battery of tests,” says Susan Evans, general manager of Beckman Coulter Genomics. “So although we are still staunch advocates of the value of sequencing and the tremendous future of next-gen and third-gen sequencing, it was very important to develop a more comprehensive offering for our strategy.“
Today, BCG has roughly 250 staff worldwide. The company is transitioning away from the Cogenics name but will keep Agencourt as a product brand “for the time being because it’s used in the name of our nucleic acid products classification products.” BCG is headquartered in Beverly, Mass.
“We’ve all watched the trend toward outsourcing versus creating core centers internally,” says Evans, “and certainly we still believe we’re seeing more outsourcing. Also, the sequencing technology is changing so rapidly that companies are looking for an opportunity to come to a service laboratory like ours which has the expertise and experience and are going out and acquiring the new platforms. It allows them to use the technology well before they might choose to acquire a system themselves or actually get to the point of saying ‘I do not want to acquire a system.’”
Beckman, of course, has long been a leading manufacturer of biomedical testing instrument systems, tests and supplies as well as a services provider. The Fullerton, Calif.-based company reported 2007 annual sales of $2.76 billion “with more than 78 percent of this amount generated by recurring revenue from supplies, test kits and services.”
Beckman jumped firmly into the genomics services in 2006 with the purchase of Agencourt for $100 million. It quickly spun out the sequencer equipment business, Agencourt Personal Genomics, selling it to Applied Biosystems Inc. (ABI was later itself acquired by Invitrogen in 2008 for $6.5 billion.)
At Beckman, the strong Agencourt brand was retained and turned into a center of excellence for nucleic acid products and services. This year, Beckman acquired Cogenics from Clinical Data. Services currently available through BCG include sequencing, sample preparation, genotyping, gene expression, biological efficiency and safety testing, with support for all levels of regulatory compliance, including Clinical Laboratory Improvement Amendments (CLIA).
Moreover, BCG offers three commercially available next-generation sequencing platforms: Roche 454 Genome Sequencer FLX with Titanium, Applied Biosystems SOLiD and Illumina Genome Analyzer. While pricing for many sequencing platforms is declining, Evans notes the platform cost is only part of the buy-versus-outsource question. She says needed know-how, sample prep expertise, bioinformatics, and other issues increasingly incline companies to outsource. In line with this, she says BCG can collaborate on study design questions with research organizations.
The addition of Cogenics brought new customers and strengthened BCG’s global reach. Beckman Coulter is a global business, but most of Agencourt’s had been U.S.-based. The acquisition added a facility in the U.K., another in Germany, and co-marketing partnership in China. “Another important component is that Cogenics' North Carolina facility has CLIA-licensed laboratory and we do primarily work for our pharmaceutical customers in that lab. But it also creates strategic opportunity for us to think of additional ways we can use that lab and different ways we can leverage Beckman Coulter product lines and opportunities,” says Evans.
It’s also fair to say a large chunk of Agencourt’s customers were academic. “We have a very diverse customer population from academic to biotech and biopharma but probably stronger on the research, academic, and industrial (bioag) side of the business. [The] Cogenics strategy was also to value a broader customer base but to focus on partnerships with pharmaceutical companies and especially to utilize the clinical genotyping and gene expression resources and clinical genotyping for clinical trial support. They also, of course, had an almost 20-year business supporting pharma biological safety testing.”
BCG is now focused on integrating the two businesses and driving revenue. Says Evans, “Our near-term initiatives are a combination of business efficiency and operation consolidation. So like any integration, we’re looking for best practices across each of these laboratories. We’re looking for increased automation. We’re looking for ways to enhance our information flow from lab to lab and be able to integrate support for our customers. We’re now five months into [that effort] and will continue over the next number of months. On the other side it’s a redesigned sales team and establishing the broader product offering and stronger messaging. We are expecting growth and have planned for growth.”
Watching the evolution of the broadly-defined genomics services business will be interesting. It’s long been a patchwork of big and small players. Recently CROs have shown interest in expanding their genomics services offering.
Julie Moore, director of global strategic marketing for BCG, says “We’ve just seen Covance acquire the Rosetta business in Seattle. That’s an interesting expansion for their business. I think there’s increasing overlap between the CROs and the typical genomics services providers such as us.” Consequently, CROs, which constitute an important customer segment for BCG, can sometimes become competitors.
So far, the genomics services market shows few signs of the consolidation striking other biotech markets. “We’ve seen a lot of small mom and pop shops popping up with the Sanger sequencing now that it’s more available and cheaper,” says Moore.
BCG’s customer set, predictably, represents a jumble of opportunistic sales and longer-term relationships. Evans conceded they don’t know how this will evolve over time, although deeper, long-term relationships with big customers are clearly desirable. Moore adds that BCG has strong relationships with some of the top biopharma community, some of those based on Cogenics’ very solid safety testing service for biologicals.
Having broadened its products and services portfolio, BCG is now wading more forcefully into the services market, trumpeting its newly-gained global presence, its heritage of next-gen sequencing expertise, and the stability of being part of services industry powerhouse Beckman Coulter.