Applied Biosystems

Updated  Oct 25, 2002
 
 
Years Jun
2002		 Jun 
2001		 Jun
2000		 Jun
99		 Jun
98		 Jun
97		 Jun
96		 Jun
95		 98-02
5-yr
Annual
Revenues (Mln US$) 1,604 1,620 1,388 1,120 940 767 642 544
Revenues Growth % -1 17 24 30 23 20 18 18
Net Income (Mln US$) 168 212 186 148 24 133
Earning Growth % -21 14 35 45 16 4
Operating Income (Mln US$) 234 280 260 197 130 101
Operating Income Growth % -16 8 32 66 29 26
Profit Margin % 10 13 13 11 10 11
Gross Margin % 52 52 54 54 54 53
Operating Margin % 15 17 19 18 14 13
Return on Equity % 16
Stockholder Equity 1,125 1,041
EPS 0.78 0.96 0.86 0.72
R&D (Mln US$) 220 185 141 133 134
Research / Sales % 14 11 10 11 11
* Earning and operating income are excluding special items
* Profit margin is based on income from continuing operations and excluding special items

Market Cap.:                                         $
Cash & Short Term Investment:     $    471 millions       (Jun 30, 2002)
Total Assets:                                        $ 1,819 millions
Long Term Debt:                                 $   171 millions
Total Liabilities:                                   $   693 millions
Shareholders Equity:                           $ 1,125 millions

Price: $ 19.31                       (Oct 24, 2002)
P/E:   23                          (based on EPS $0.86, the average of last 2 years and the company's projection of $0.85 for 2003)

Profile

- world leading supplier of  biotechh research instruments and systems
- products are automated DNA sequencers, spectrometers and reagents for research in pharmaceutical, molecular biology, molecular medicine, agriculture, human ID, food and environment
- it is applying computer technology on life science
- buyers are private or government granted labs all over the world
- founded in 1981 as Applied Biosystems and later acquired by Perkin-Elmer. It had used the name PE Biosystem, but in 2000 it changed back to Applied Biosystems again.
- revenues in 2002 was US$ 1.6 billion
- as estimated by an analyst, it owns 80% market share of large-scale sequencers in the world
- stock code: ABI
 
 
Source of Revenues 2001
mln $		 % of Total Revenues 2000
mln $		 % of Total Revenues % Change
DNA Sequencing Products 725 45% 603 38% -17%
SDS and other Applied Genomics Products 262 16% 323 20% +23%
Mass Spectromery 223 14% 285 18% +28%
Core DNA Synthesis and PCR Products 253 16% 237 15% -6%
Other 157 10% 156 10% -
Total 1620 1604 -1%

How does it make money?

Teamed with Celera Genomics, the Company has shown that they have correctly followed and is also leading the big trend in life science and molecular biology.  After genomics, the Company is moving towards proteomics.  It is right into the markets where pharmas and other research labs spend most of their money.

Does it have a growing market?

For large pharmas, they need to have 3-5 new drugs each year in order to maintain their growth.  In the race to become the first in drug discovery, genomics and proteomics are helping these drug makers to accelerate the research process.  Therefore they have to spend a great deal of money for those equipments, at which Applied Biosystems targets.

In government granted, academic or commercial labs, scientifists all over the world are competing to have some breakthrough
in life science.  It creates a great demand for the machines to be used.

Is it a monopoly-type business?  How could it keep its edge?

In the area of genomics, the Company has the dominating power (2/3 of market share) even though the competition is quite big.   For the new area of proteomics, Applied Biosystems may not be the first one to develop such kinds of machines.  The competition is even greater.  They have to prove why their products are better than others.

Who are its competitors?  Why is it better than others?

In the U.S., nine out of 10 university-based genetics labs use the company's equipment. ("Mercury News", June 2000)

Being an early runner, it has well established its reputation in this young market of genomics instrument.  Late comers are much difficult to enter.  Its longer history in the field also gives them the advantage of leading expertise.

It is one of the few biotech companies which are having profits.  There is a financial advantage over other late comers who are mostly at loss.  Its ample inflow of  fund is helping the company to move into a bright new sector of proteomics.

For DNA sequencers, Amersham Pharmacia's 288 MegaBace owns about 20% in high end market.  It is said to be less expensive, more flexible and reliable.  Therefore the competition is intensive.

How does the management react to environmental changes and competitions?

What are its major products?  Will they be short lived?

A) Molecular Biology
   >  PCR Products  <
   Sequence Detection Systems (includes ABI PRISM 6700 Automated Nucleic Acid Workstation)
    -  to use PCR technology to prepare DNA for drug discovery and analysis.
       Polymerase Chain Reaction ("PCR") is a process in which a short strand of DNA is copied multiple times, so that it can be more readily detacted and analyzed.

   >  Genetic Analysis  <
   The Company is believed to control at least 2/3 of the market for gene sequencers.
   ABI 3730 and ABI 3730xl DNA Analyzer
    -  large scale DNA sequencing instrument
 
    ABI 3100 DNA Analyzer
     -  introduced in 2000 for use by academic programs and commercial labs

    >  DNA Synthesis  <
    DNA synthesizers produce synthetic DNA for genetic analysis.

    >  PNA  <
     -  to manufacture peptide nucleic acid ("PNA") for research

    >  Applied Markets  <
    MicroSeq 16S rRNA Bacterial Sequencing Kit
     -  to identify microorganisms

    Human Identification Systems
     -  for crime labs and other agencies to identify individuals based on their DNA.

    >  Human Diagnostics  <
     -  to use PCR techniques for human diagnostics

    >  Cellular Detection Systems  <
     -  to use scanning technology to detect a cell

B)  PerSeptive Biosystem
     >  Mass Spectrometry  <
     MALDI-TOF
      - for analysis of proteins

     MALDI-Q-STAR Pulsar Systems
      -  new systems for proteomics
      -  scheduled to be released in fall 2000

     >  Purification  <
     PerSeptive Biosystems Vision Workstation
      -  proteins are separated and purified for analysis

     >  Protein Sequencing and Synthesis  <
     PerSeptive Biosystems Procise Protein Sequencing

     PerSeptive Biosystems Pioneer & 433A Peptide Synthesis
     - designed for synthesis of peptides (the building blocks of proteins), peptide analogs and small proteins