Life Sciences Business
Tecan is the market leader and a pioneer in laboratory automation. 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 almost 40 years. In 2018, the Life Sciences Business segment represented 55% of total sales of the Tecan Group.
SALES OF THIRD PARTIES
LIFE SCIENCES BUSINESS(CHF million)
LIFE SCIENCES BUSINESS(CHF million)
LIFE SCIENCES BUSINESS(CHF million)
LIFE SCIENCES BUSINESS(in % of sales)
- Sales to third parties + intersegment sales
Sales in the Life Sciences Business increased by 7.0% to CHF 328.2 million in 2018 (2017: CHF 306.9 million) and were 5.6% above the prior-year period in local currencies. On an organic basis (excluding sales from NuGEN for the last four months), sales in 2018 rose by 4.6% in local currencies. After a moderate start into the year, based on a high comparative basis from the prior-year period, sales in the Life Sciences Business accelerated significantly in the second half and were 11.3% above the prior-year period, corresponding to an increase of 10.8% in local currencies. On an organic basis, sales in the second half grew by 8.9% in local currencies. The newly launched Fluent Gx platform variant enjoyed strong demand on the market, which contributed significantly to this growth.
Full-year order entry in the Life Sciences Business segment grew with a double-digit rate, significantly exceeding sales, which resulted in a sharp rise in order backlog.
Reported operating profit in this segment (earnings before interest and taxes; EBIT) rose to CHF 51.3 million (2017: CHF 50.5 million), despite the cost impact from the NuGEN acquisition. The corresponding operating profit margin reached 14.8% of sales (2017: 15.9%).
HIGHLIGHTS OF 2018
- Market launch of Fluent® Gx platform variant for regulated markets; successful registration as a Class I medical device in the US
- Acceleration of broad genomics strategy with the acquisition of NuGEN Technologies
MARKETS AND ORGANIZATION
In the Life Sciences Business segment, Tecan distributes its branded 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. Around one-third of sales in this segment are generated from customers in the diagnostics market, for example large reference labs. 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 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, more flexible and user-friendly automation solutions continue to play a key role. The local sales organizations take into account the various needs and requirements of both customer groups.
Within the Life Sciences Business, the largest instrument 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 is the global market leader in automated liquid handling platforms. 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. They are used as independent devices or integrated within the liquid handling workstations 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. Tecan’s offering includes instruments, special software packages and application expertise as well as consulting, service and consumables.
In select application areas, 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.
EXPANDING THE CORE BUSINESS
In Life Sciences Business the market leading position will be further increased and market share gained through launching new products and expanding geographically.
NEW INNOVATIVE INSTRUMENT PLATFORMS
A continuous stream of innovations and market launches of new instrument platforms and variants thereof set the basis for future growth on the instrument side as well as for recurring revenues generated from services, consumables and reagents.
Fluent: Simplicity – Productivity – Confidence
The Fluent Laboratory Automation Workstation is the highest performance platform within Tecan’s extensive portfolio of liquid handling solutions for laboratory automation. Fluent is a unique automation concept that provides high precision, superior throughput and extended walkaway time. Employees in the laboratory can get more done, with greater confidence in the results. It is available in three sizes to suit the throughput requirements of almost any laboratory. Fluent was developed around the application-specific needs of laboratories. In recent years, Tecan continuously launched new Fluent solutions on the market that target specific applications. For example, these solutions address the need for automation in the rapidly growing cell biology market, in compound management, in the area of genomics as well as in numerous other fields of application.
High-definition liquid handling ensures precision and accuracy over a wide range of volumes, from sub-microliter to several milliliters. The patented Adaptive Signal Technology™ detects even small volumes of liquid with precision, allowing for the use of smaller reagent and sample volumes for significant cost savings. The patented Dynamic Deck™ uses a modular, multilevel design to offer exceptional deck capacity.
Liquid handling and labware logistics have never been easier, thanks to the instrument’s three, task-specific arms, which operate simultaneously to ensure timely completion of assays, minimizing the time cells spend outside of the incubator. The platform’s intuitive FluentControl™ software and built-in touchscreen interface simplify day-to-day activities by guiding scientists through routine set-up and operation of the system for consistent, reproducible operation.
The Fluent Gx platform variant was developed for the automation of laboratory workflows in regulated markets and was launched in various regions in the first half of 2018. After successful registration as a Class I medical device, the platform also became available in the US. Its specific functionalities, which facilitate greater process security, traceability of samples and stricter user management, have met with a lot of interest and several major lab chains ordered multiple instruments at once.
In addition, Tecan, through its Partnering Business, is the partner of choice in automation systems for many companies in the in-vitro diagnostics industry. With the availability of Fluent Gx, customers in regulated markets are also able to benefit from the high level of productivity and performance offered by Fluent platforms.
Spark ignites productivity in the lab
The Spark multimode microplate reader is a new generation of reader platform designed to offer greater flexibility and increased productivity for cell biology and genomics customers. The 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. The special fusion optics function provides a unique sensitivity, speed and flexibility. Other options include the 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. Automated cell imaging and confluence measurement allows cell cultures to be incubated and monitored in the measuring chamber.
In the year under review, Tecan has made significant progress in the development of a new platform variant of Spark, aiming to introduce new imaging functionalities into the market in 2019.
In order to provide research laboratories with a more cost-effective entry into state-of-the-art reader technology, Tecan added an updated version of the still highly popular Infinite® 200 PRO series of multimode microplate readers to its product offering in 2017. This proven, reliable reader platform has already been cited in more than 1,800 scientific publications and enjoys great popularity across the world. Customers in the area of life science research can now order one of six application-oriented configurations of the Infinite 200 PRO platform that is perfectly geared to their research and budget.
Beyond the Ordinary – TECAN LABWERX
The speed of change is high in life science research, frequently outpacing the lab industry’s development of standard product. Tecan Labwerx creates custom solutions to address the ever-changing needs of the market. At Tecan, automation and robotic systems integration is in the Company’s DNA. Tecan’s multidisciplinary team of life scientists, engineers and software experts has been creating custom automation solutions for over 20 years, delivering over 1,000 projects – from simple modified workstations to large-scale robotic integrations.
There may not be a readily integrated automation platform that meets the unique needs of new and evolving workflows in a laboratory or manufacturing facility. Innovation in automation instrumentation happens on its own timeline that may not match the unique needs of brand-new biotechnology. With its customizing capabilities, Tecan Labwerx can deliver solutions beyond the ordinary, which was an important contributor to sales and order growth in the year under review.
INCREASING PRODUCTIVITY WITH UNPARALLELED INSIGHTS
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. However, in today’s busy labs, mission-critical decisions about laboratory equipment purchases, service contract renewals, consumables spending, and staffing are often made on the basis of incomplete information.
Why did a particular instrument run fail? Why are some protocols less efficient than others – or have more workflow errors? Why do similar tasks take longer to complete at different times of the day, or on different days of the week? To optimize instrument uptime and increase throughput, labs need to get to the root of such questions and identify underlying causes. Historical instrument usage patterns may highlight capacity gaps, helping to deploy resources more effectively, and improve troubleshooting.
In the year under review, Tecan has introduced Introspect™ to help laboratories to increase their productivity with unparalleled insights. Introspect is an easy and secure cloud-based reporting and analysis service. Data from connected automation workstations are displayed on intuitive dashboards with real data on instrument uptime, consumables consumption and run success rates. Introspect completely replaces manually maintained spreadsheets, it automatically gathers instrument runtime, consumables usage, error rates and more, directly from Freedom EVO® or Fluent systems. Even historical and archived instrument data can be uploaded which allows a lab manager to study past data to make informed decisions possible for the future.
One or more instruments, even across multiple locations, can be connected and Introspect dashboards can be viewed on a web-browser anywhere.
EXPANDING PRESENCE IN 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 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. Since 2012, sales have almost tripled.
In China, laboratories in the largest hospitals 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 or biopharma research. The 13th Five-Year Plan, a blueprint containing the country’s social, economic, and political goals, provides continued opportunities for Tecan. One of the ten focus sector areas is to strengthen innovation in science and technology, boosting science spending and reducing bureaucratic barriers for scientists. Improvements in the public health system also continue to be a priority with concrete projects defined to lower the chronic premature mortality rate and further building out the hospital infrastructure in all counties.
In order to exploit the various end markets in China, Tecan is continuing to invest heavily in expanding its marketing and service organization. Headcount in the local organization exceeded 100 employees in the year under review, making China the second largest local organization for Tecan. A larger direct market presence should lead to a further significant increase in sales in China in the coming years.
BUILDING UP FURTHER PILLARS IN THE INSTRUMENT MARKET
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 (now Tecan SP) in August 2016 makes it possible to offer dedicated instruments in the area of sample preparation for mass spectrometry, which are increasingly being used for automated solid phase extraction. Automated solid phase extraction with positive pressure workstations offers many advantages compared with conventional vacuum-based purification. The positive pressure ensures a steady flow across a series of pillars. Ultimately, better-purified samples can produce higher-quality analytical results that, thanks to automation, are not dependent on the individual user.
The new Resolvex A200 positive pressure workstation increases the productivity of labs by, among other things, enabling longer operating times without user interaction. It weighs less and is more compact, powerful and easier to operate than other models. After a successful market introduction in the US, the Resolvex A200 was also launched in Europe in the year under review. To enable all process steps of a workflow to be automated, Tecan also developed a fully automated solution, integrating the Resolvex A200 in Tecan’s liquid handling workstations.
Also in other application areas like genomics, Tecan is developing new dedicated workstations to fully automate specific workflows. Shortly after the acquisition of NuGEN in September 2018 (now Tecan Genomics), Tecan started to develop the NGS DreamPrep, a fully-automated approach to next-generation sequencing (NGS) library preparation for research use. This groundbreaking new approach offers quality controlled, sequencing-ready NGS libraries in just a matter of hours, with minimal manual interaction and no sample loss. NGS DreamPrep is a full walkaway solution that combines the Tecan Fluent liquid handler and Infinite plate reader, together with Celero™ DNA-Seq and Universal Plus mRNA-Seq library preparation kits – an optimized solution that brings significant improvements in speed, flexibility, accuracy and precision.
EXPANSION OF RECURRING SALES
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 select applications in both markets so as to be able to offer fully integrated solutions as well. Reagents and consumables already contributed about one third of segment sales during the period under review.
EVOLUTION INTO A SOLUTIONS BUSINESS
As part of the company’s strategy, Tecan is increasingly seeking to provide comprehensive solutions in the areas of specialty diagnostics and life science research as part of the Life Sciences Business, including the reagents or functional consumables used during specific applications. This range of solutions should open up new markets for Tecan, without competing with the typical in-vitro diagnostic customers in Tecan’s Partnering Business.
Tecan made the first step in this direction with the acquisition of IBL International in 2014. 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 microtiter plate-based immunoassays for specialty diagnostics. New tests were again added to the broad portfolio in the period under review. A total of about 120 assays have already been tailored to the Tecan automation platform.
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 (Tecan SP), Tecan expanded its offer of dedicated total solutions to a new market segment in the autumn of 2016. Tecan SP is a leading provider of sample preparation solutions for mass spectrometry, previously with a focus on the North American market.
Its comprehensive product portfolio provides analytical laboratories with 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 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 the improved purification of the samples enables longer maintenance intervals. 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. Tecan’s application-oriented approach enables it to offer its customers a one-stop shop for everything from receiving samples to sample preparation to transferring sample parameters to the mass spectrometer.
In September 2018, Tecan successfully closed the acquisition of NuGEN Technologies (now Tecan Genomics) to further expand the Company’s dedicated solutions offering into the new market segment of next-generation sequencing (NGS). NuGEN has already been a leading provider for innovative NGS kits and genomic sample preparation solutions for the fastest growing field within the genomics area, serving customers in life science research and applied markets. The business will now benefit from Tecan’s global presence, customer base and strong position serving the market with automation platforms optimized for NGS sample preparation.
Tecan can now provide innovative genomic sample preparation for NGS and microarrays for a broad range of sample types including RNA and DNA from whole tissues, preserved and prepared tissue samples (FFPE, Formalin-Fixed Paraffin-Embedded), single cells and liquid biopsies such as from blood samples. An example of the innovative product portfolio is the newly launched Celero™ DNA-Seq with NuQuant library system which provides researchers with a simplified library preparation workflow with integrated quantification for DNA sequencing. Next-generation sequencing technologies are currently transforming the life sciences, e.g. the field of cancer research, due to the wealth of genetic information obtained.
NGS workflows are composed of multiple complex steps, several of which need to be performed prior to loading samples in the actual sequencer. The most critical step prior to sequencing is the so called library preparation, in which many samples are processed in parallel and its correct performance is key to match the individual DNA sequences with the respective samples again after sequencing. The quality of prepared libraries has a significant impact on the sequencing process, the reproducibility and usability of the data and thereby ultimately on the overall data quality. With large numbers of samples being processed, library preparation can actually cost more than the sequencing itself.
Costs associated with NGS overall are dropping, making the technology more affordable and widely accessible. A higher adoption of NGS and fast growing sample numbers increase the need for automation, a particular strength of Tecan, especially in the genomics area. With automation, labs can increase the throughput and eliminate unnecessary manual steps and sources of error.
EXPANSION OF RECURRING SALES WITH PLASTIC CONSUMABLES
Sales of consumables made of plastic grew strongly again in the period under review. Tecan plans to further expand the share of these recurring sales. Pipette tips, which are used with liquid handling platforms, account for the largest proportion of consumables. 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 and the strongly growing genomics applications, which demand the use of disposable tips.