In the second half of the year, sales in the Life Sciences Business increased by 10.7% in local currencies and were 11.7% above the prior-year period in Swiss francs. On an organic basis, excluding sales from SPEware in the last quarter, sales in the second half grew by 7.5% in local currencies. Sales for the full year totaled CHF 280.2 million, representing an increase of 8.6% in local currencies and 10.7% in Swiss francs over the prior-year period (2015: CHF 253.0 million). On an organic basis, sales increased by 6.8% in local currencies in 2016. The new Fluent and Spark platforms as well as recurring sales of services, consumables and reagents made a considerable contribution to this growth. Order entry in the Life Sciences Business again exceeded sales for the full year and saw an acceleration in the second half, supported by a strong market uptake of new products.

Operating profit before interest and taxes (EBIT) in the segment was CHF 45.7 million in the year under review (2015: CHF 45.4 million), corresponding to an operating profit margin of 15.6% of sales (2015: 17.0%).

Tecan is the market leader and a pioneer in laboratory automati on. Tecan has offered a wide range of laboratory instruments and automated workflow solutions for use by pharmaceutical and biotechnology companies, government research institutions and universities, diagnostic laboratories, and scientists from numerous applied markets for more than 35 years. In 2016, the Life Scien ces Business segment represented 55% of total sales of the Tecan Group.

• Acquisition of SPEware Corporation, a leading provider in the area of sample preparation for mass spectrometry, 
• Market launch of additional functions and applications of the Fluent® laboratory automation family as well as a new variant of the Spark® microplate reader.

In the Life Sciences Business segment, 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, while service engineers as well as a help desk and expert-line specialists work to ensure a high degree of customer loyalty and satisfaction.

Most of these customers work in the field of life science research and applied markets. More than one-quarter of sales in this segment are generated from customers in the diagnostics market. Customers in the fields of research and diagnostics place various requirements on products and the sales process. The diagnostics market is strictly regulated by national supervisory authorities and each automation solution is used only within a clearly defined area of application. Product features such as instrument reliability, quality and reproducibility of test results as well as user-friendliness are extremely important. And in the area of research, highly innovative, flexible and user-friendly automation solutions continue to play a key role. We take the various needs and requirements of both customer groups into account with separate management and local sales organizations geared specifically toward both groups.

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 from the wide-ranging portfolio of available 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 smaller 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 the 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 expertise as well as consulting, service and consumables. Tecan is continuing to show strong growth in its consumables business.

In the fields of immunoassays for diagnostic special parameters and sample preparation for mass spectrometry, Tecan also offers integrated total solutions, including appropriate reagents and functional consumables.

The corporate strategy pursues three vectors to ensure sustainable profitable growth. Tecan’s specific strategies allow it to drive forward customer projects with the respective business models of the two business segments.

In Life Sciences the market leading position will be further increased and market share gained through launching new products and expanding geographically.

At the beginning of 2015, Spark® marked the introduction of a new generation of the reader platform to the second product line of detection instruments. The Spark® multimode microplate reader is designed to offer greater flexibility and increased productivity for cell biology and genomics customers. The all-new platform delivers a combination of exceptional capabilities and ease of use to simplify routine laboratory tasks. In the core of the instrument a unique optics module was developed that ensures that laboratories no longer have to make a trade-off between flexibility and sensitivity. Integrated capabilities for cell counting and incubation simplify cell biology protocols, while ultra-fast scanning – in under five seconds – allows for rapid application analysis in the field of genomics. In early 2016, Tecan rolled out a new variant of the Spark® multimode microplate reader. With the new functions, Spark® offers solutions for almost every application in drug development or other research areas. The special fusion optics function provides a unique sensitivity, speed and flexibility. Other options include the newly developed Te-Cool™ cooling module. This module makes it possible for the first time to set the temperature of the measuring chamber lower than the room temperature and thereby achieve exact and reliable results. In addition, Spark’s cell handling features have been enhanced by two new features: automated cell imaging and confluence measurement. This allows cell cultures to be incubated and monitored in the measuring chamber.

Modern laboratory automation increases sample throughput in a laboratory, minimizes human error, enhances precision, delivers reproducible test results, documents these results and thus improves productivity as a whole in the laboratory. The currently available solutions are technically able to automate highly complex processes; however, they are often complicated to use, meaning usage is limited to a small expert group within the laboratory. 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 is renowned for its user-friendly solutions and has increased its focus on this area.

Tecan offers, for example, automation solutions that fully automate sample preparation for gene sequencing (next-generation sequencing) and mass spectrometry. Both areas are among the fastest-growing applications in life science research.

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 already one of the world’s largest healthcare markets, even though the country’s 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 already been active in China for a number of years, and since 2008 through its own subsidiary. In recent years, the average sales growth rate has been high. Tecan, for example, is the market leader in liquid handling platforms for the largest hospitals (class 3). The laboratories use Tecan platforms to test blood samples for infectious diseases, for instance. The number of the largest hospitals is constantly growing, along with patient numbers and utilization. The corresponding rise in diagnostic test volumes 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 heavily in expanding its marketing and service organization. In the reporting year, sales rose by a double-digit growth rate, well above the previous long-term average of 25%. A larger direct market presence should lead to a further significant increase in sales in China in the coming years.

Tecan is aiming to build up further pillars in the instrument market for life science research. This applies in particular to areas beyond conventional, open and flexible robotics solutions for liquid handling and microplate readers. There are plenty of opportunities here, especially in dedicated instruments for sample preparation. In adjacent markets, Tecan sees opportunities to extend its traditional core business so as to grow faster than the overall markets for life science research instruments. This potential can be accessed both organically and through acquisitions. For example, the acquisition of SPEware in the year under review may make it possible to offer dedicated instruments in the area of sample preparation for mass spectrometry, which is increasingly being used for automated solid phase extraction. The integration of these overpressure processors in the liquid handling workstations of Tecan enable the automation of all work steps in the workflow.

The third vector focuses on expanding recurring revenues in Tecan’s two main markets, life science research and in-vitro diagnostics. The Company wants to supply reagents and consumables for both markets so as to be able to offer fully integrated solutions as well. Reagents and consumables contributed 26% of segment sales during the period under review.

As part of the company’s strategy, Tecan is increasingly seeking to provide comprehensive solutions in the areas of diagnostics and life science research in the life sciences business, including the reagents or functional consumables used during the application. This range of solutions should open up new markets for Tecan, without competing with the typical customers in Tecan’s Partnering Business. 

Tecan made the first step in this direction with the acquisition of IBL International in the summer of 2014. In the field of microtiter plate-based immunoassays, Tecan has one of the widest ranges of tests for specialty diagnostics to be used in research and clinical laboratories. This enables Tecan to leverage its automation expertise and leading position within the immunoassay market for open instrumentation platforms and combine dedicated instruments with one of the widest ranges of immunoassays for specialty diagnostics. New tests were added to the broad portfolio in the period under review. A total of 75 assays have already been tailored to the Tecan automation platform.

Microtiter plate-based immunoassays are a growing market with a large and increasing number of tests for medical specialities, a market segment generally outside the scope of large in-vitro diagnostic companies and therefore outside the focus of Tecan’s typical Partnering Business customers.

The product portfolio comprises enzyme, radio and luminescence immunoassays for research and clinical laboratories, including a large selection of specialty assays for endocrinology (hormone measurement), neurodegeneration (e.g. Alzheimer’s disease), neonatal screening and assessing steroid hormones in saliva.

With the acquisition of the US-based SPEware Corporation (SPEware) during the year under review, Tecan expanded its offer of dedicated total solutions to a new market segment. SPEware is a leading provider of sample preparation solutions for mass spectrometry, with a focus on the North American market.

This company provides analytical laboratories with highly developed solutions for sample preparation by combining functional consumables with dedicated instruments and modules. As a result, the procedures for the combination of liquid chromatography with mass spectrometry (LC-MS) can be made more efficient. The total market for this type of extraction technology is growing in the mid single-digit percentage range per year. 

In recent years, SPEware has expanded significantly above the ­market rate of growth, thanks to a differentiated product offering and a market development that increasingly promotes the use of automated solid-phase extraction for high-complexity tests over other sample preparation methods. 

The customers of SPEware are mainly large reference laboratories as well as specialized laboratories in North America. They use the solutions that are provided mainly for toxicological investigations and other analyses of complex samples such as urine and saliva. The separation of a target analyte from a complex sample before it can be introduced into an LC-MS improves the robustness of the assay and leads to reduced maintenance for the instrument. The proprietary, microparticle-filled consumables for enrichment of a substance for the solid phase extraction offer significant advantages, including higher selectivity, reproducible separation and improved data quality.