Consequences for Tool-Focused Firms
Qiagen said it has mostly been able to weather Europe’s economic storms. Its quarterly net income shrunk 4% when measured at constant exchange rates, to $56.3 million from $58.8 million, despite a 5% rise at constant exchange rates in net sales to $288.9 million from $274.3 million. The company cited higher spending on sales and marketing for its recently acquired Cellestis and Ipsogen portfolios.
Europe accounts for 33% of sales from the combined region that includes Africa and the Middle East. During Q3, the region’s sales rose 15% at constant exchange rates compared with third quarter 2010. The company cited its rollout of the QIAsymphony RGQ automation system and higher sales among molecular diagnostics and academic customers in Northern Europe.
“The global rollout of this system is progressing very well, and we are on track to reach our goal of 550 installed systems by the end of 2011, creating significant opportunities for consumables sales,” Qiagen spokesman Przemek Jedrysik told GEN.
He said the company sees the strongest demand for the the QIAsymphony platform coming from diagnostic laboratories. “We believe that the QIAsymphony is particularly attractive for scientists in areas close to the patient and clinical research, and this is where you would typically see the strongest demand,” Jedrysik explains. “But we also register demand in other customer classes and actively target the academic and pharmaceutical research market.”
Another factor driving European sales, according to Jedrysik, was the ongoing effort across the EU to standardize the marker set used in human ID testing to facilitate data exchange between national DNA databases.
“While the degree of implementation varies across countries, this initiative and the corresponding shift to novel methods opened up new market opportunities that Qiagen effectively addressed with a range of tailored assays for human ID applications. The uptake of these products has been very good, and we believe that we can continue to grow our market share in forensics as the harmonization efforts continue,” Jedrysik added.
Across the continent, as in the U.S., however, academic customers delivered only low single-digit sales growth for Qiagen. The company blamed this performance on increasing budget uncertainty and austerity measures drying up public grant funding.
In a reflection of the continent’s debt challenges, Qiagen said demand for its products in southern Europe was lower than in northern Europe. “In general, the European market is quite diverse, so you won’t necessarily see the same development patterns in different countries.”
It was Prince Metternich, the influential 19th century European statesman, who famously said, “When France sneezes, Europe catches a cold.” After a half-century of marrying their economies and some of their political structures, it is indeed Europe that is feeling the proverbial chills under the strain of continued economic sluggishness in the U.S. and especially crushing debt by Greece, Italy, Portugal, and Spain.
On November 20, Spanish voters responded to austerity measures by replacing the governing Socialist majority in Parliament with opposition conservatives. This happened just a few days after Greece replaced its Socialist prime minister with a former banker in a power-sharing arrangement.
During 2011, eight European nations changed political leadership either mostly or partially due to the debt crisis: Denmark, Finland, Greece, Ireland, Italy, Portugal, Slovakia, and Spain. The changing of chairs among political leaders is unlikely over the coming year to stop European economies from plunging into recession or at least getting close to it. As a result, the continent’s stronger life science companies will be hard-pressed to avoid being taken down with those economies.