Life Sciences Business
Total sales Life Sciences Business1
EBIT Life Sciences Business
EBIT margin Life Sciences Business
(in % of sales)
1 Sales to third parties + intersegment sales
Tecan is a pioneer and the market leader in laboratory automation. Tecan has been offering a wide range of laboratory instruments and automated workflow solutions for use by pharmaceutical and biotechnology companies, government research institutions and universities, diagnostic laboratories, as well as scientists from numerous applied markets for more than 30 years. Most of these customers work in the field of life science research. Around one-third of sales in this segment are generated from customers in the diagnostics market.
Tecan distributes products through its own market organization and distributors in more than 50 countries worldwide. Sales and application specialists communicate with end customers to discuss their various requirements in terms of automating highly diverse laboratory procedures, and service engineers and helpdesk and expert-line specialists work to ensure a high degree of customer loyalty and satisfaction. In 2013, the Life Sciences Business segment represented 58 % of total sales of the Tecan Group.
Within the Life Sciences Business, the largest product group is the scalable liquid handling platforms, which are used to pipette fluids with optimum precision and automate laborious and repetitive manual procedures. These platforms can be configured with an array of additional modules and devices to provide a high degree of flexibility and easy adaptability for a diverse range of applications. Highly complex customized offerings are also provided to a group of customers. Tecan also provides a wide range of bioanalytical instruments such as microplate readers and washers which allow reactions to be monitored or specific analytes to be measured and are used as independent devices or integrated within liquid handling platforms to ensure a complete customer solution. Tecan also works with numerous partner companies to integrate their test procedures or devices to provide comprehensive workflow solutions. Such workflow solutions include instruments, software packages and special application know-how as well as consulting, service and consumables. Tecan is continuing to show strong growth in its consumables business. New, valueadded products that have been launched in recent years are the driving forces behind this growth.
Focus on user-friendliness
Modern laboratory automation increases sample throughput in a laboratory, minimizes human error, enhances precision, delivers reproducible test results, documents these and thus improves productivity as a whole in the laboratory. Today, it is technically possible to automate most highly complex processes using the solutions currently available. However, they are often complicated to use, meaning usage is limited to a small expert group within the laboratory. In addition, switching between applications is often laborious. User-friendliness is therefore one of the most important benefits for customers, in addition to existing technical differences in the precision and reliability of the system. Tecan has made a name for itself with regard to user-friendliness and further increased its focus on this in the year under review. It has already been possible for several years to start and operate applications intuitively via a touch-sensitive screen using the software interface TouchTools™ developed by Tecan. Applications can be organized flexibly by customers and saved as a standard application, thus making daily routine tasks considerably easier.
In a further step, Tecan launched a special TouchTools-based user assistant or wizard for a new application. Users are guided step-by-step through the set-up process of PCR-based applications and need only minimal instructions. Sample information can simply be entered manually, imported from a file or identified by barcode scanning. The wizard translates these details at the system software level and starts the application. After setup, the data are transferred seamlessly to the downstream thermocycler.
Flexibility in automation is a key advantage in various areas of research. Tecan covers this need with a large array of additional modules, with which the instruments can be configured. However, in some areas, users want to purchase an instrument that is already configured for a specific application and start routine work immediately. Tecan therefore launched smart automation solutions for the first three applications.
Smart automation solutions are preconfigured with all the necessary modules for the specific application, have a dedicated and intuitive TouchTools interface and include application manuals and ready-to-run methods for specific reagents and consumables. Customer training also makes a significant contribution to achieving optimum use of the productivity of automation solutions. The Company offers easily accessible and affordable online training for customers via the Tecan Academy. Interactive tools and easy-to-understand videos help them to quickly master Tecan’s automation solutions and use them to optimum effect.
Opening up global growth markets
Many countries are currently investing considerable amounts in healthcare and life science research. Tecan is focusing in particular on expanding its business in China, which is now the world’s fourth largest healthcare market, although its spending per capita is still only a fraction of that in many western industrialized countries. Continuing economic growth combined with rising spending per capita make this an extremely attractive market. Tecan has been active in China for a number of years, and since 2008 through an own subsidiary. Over the last five years, sales growth has averaged over 20 %. Profitability is comparable with that in established markets. The majority of sales in China are generated in the Life Sciences Business segment, more than half of whose customers work in the field of diagnostics. Tecan is the market leader here in liquid handling platforms for the largest hospitals (tier 3). The laboratories use Tecan platforms to test blood samples for infectious diseases, for example. The number of the largest hospitals is constantly growing, along with patient numbers and utilization. The corresponding rise in diagnostic test volumes in hospital laboratories is increasing the need for efficient automation.
Large investments are also being made in laboratory infrastructure in the area of academic research. According to estimates, government funding already accounts for half of the budget of the National Institutes of Health (NIH) in the US. It is assumed that government funding in China will exceed that in the US by as early as 2020.
In order to exploit the various end markets in China, Tecan is continuing to invest in expanding its marketing and service organization. A larger direct market presence should lead to a further considerable increase in sales in China in the coming years.
Number of the largest hospitals in China
Expansion of recurring sales
Tecan generated 25 % of sales in this segment from services and 14 % from consumables in the year under review. The share of these recurring sales is to be further expanded. Plastic pipette tips, which are used with liquid handling platforms, account for the largest proportion of consumables. Tecan supplies several hundred million pipette tips per year. The use of high-quality consumables improves data quality and ensures that test results are reproducible. They are a key part of the validated workflow solution in diagnostics.
Tecan is continuously expanding its product offering in the area of plastic consumables and benefits from the broad base of existing installed instruments. New products were also launched in 2013, most recently special pipette tips, individual layers of which can be stacked nested in one another. This enables high-throughput processing in which only a fraction of the liquid handling platform deck space is needed to store the consumables.
Tecan is also increasingly launching consumables that contribute even greater value added to the workflow solution. In the year under review, the first product launched was the AC Extraction Plate™. This extraction plate, with the inner surface of each well coated with a special technology, was developed to make it possible to easily automate sample preparation for mass spectrometry. The proprietary TICE™ (Tecan Immobilized Coating Extraction) technology enables extraction of low molecular weight analytes such as vitamin D or testosterone for subsequent analysis with a mass spectrometer. The AC Extraction Plate eliminates numerous laborious and difficultto- automate process steps.
Sales in the Life Sciences Business totaled CHF 223.7 million in 2013 (2012: CHF 235.2 million). The end-customer business constituted 57.6 % of total Group sales (2012: 60.1 %). In local currencies, sales were 3.7 % below the prior-year level, and 4.9 % lower in Swiss francs. This decline was largely due to fewer instruments sold in the established North American and European markets, which were affected by austerity measures and budget cuts. By contrast, sales in China and of consumables recorded strong growth. Order entry also remained below the prior-year level in the year under review, but exceeded sales.
Sales did not increase as much as expected in the second half of the year, and in local currency terms were 3.8 % below the prior-year period. However, Tecan achieved higher sales than the prior-year period in the second half in North America, and also observed slightly improved sales development in Europe. Order entry in the Life Sciences Business was above the prioryear level in the second half.
Operating profit in the segment reached CHF 18.4 million in the year under review (2012: CHF 29.3 million) and the operating profit margin declined to 7.8 % of sales (2012: 11.6 %) as a result of the lower sales volume.