Based on its strong potential in China,
Life Technologies
(
LIFE
) aims to strengthen its business in that region. In order to
achieve this objective, the company has formed a partnership with
Sino Biological Inc., a leading Chinese biotech company, for
distribution and product development. As per the partnership, Life
Technologies will distribute Sino Biological's portfolio which
includes recombinant proteins, antibodies and Elisa kits.
This partnership agreement comes on the heels of the recent
acquisition of Beijing Mao Jian United Stars Technology Co., Life
technologies' distributor of the Invitrogen brand reagent portfolio
in Beijing and the rest of North China. This deal has created one
of the largest direct selling forces in the Chinese life sciences
reagents market.
Life Technologies has gained a strong foothold in the emerging
markets as well as in the Asia-Pacific region, where operations are
currently being expanded. After recording a temporary slowdown in
its Greater China business about a year ago, the company augmented
its dealer model and supplemented it with its own sales force.
These efforts have led to success in restoration of operations in
Greater China to normal levels with high-teens growth.
The company's distribution centers in both Singapore and China
are currently expanding, as is its manufacturing center of
excellence in Singapore, which will eventually be a 133,000 square
feet facility (from 75,000 square feet). The center will design and
manufacture a wide range of products including Ion next-generation
sequencing and molecular diagnostic instruments. Benefits from
these initiatives are being realized in the form of products with
higher margins and faster turnaround in addition to providing
further tax efficiencies.
While the growth prospects in the emerging markets are
encouraging, Life Technologies has adopted a conservative outlook
with respect to the rest of the international market. The company
expects overall growth of the European region (which includes all
of the Europe and the emerging markets in Russia, the Middle East
and South Africa) to be at the low end of the previous guidance -
approximately at 1%.
As a result, Life Technologies now expects organic revenue
growth for 2012 to be at the low end of the previously guided range
of 2−4% due to slower growth in Europe. The company also lowered
the top end of the earnings guidance on the heels of currency
headwinds, dilution from recent acquisitions and lower organic
growth. However, some of these factors are expected to be offset by
lower discretionary spending and a marginally lower tax rate. A
continuous share buyback program will also benefit it by lowering
the outstanding share count. Life Technologies experiences tough
competition from players like
Illumina
(
ILMN
) and
Thermo Fisher Scientific
(
TMO
), among others.
We have a Neutral recommendation on Life Technologies. The stock
retains a Zacks #3 Rank (Hold) in the short term.
ILLUMINA INC (ILMN): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis
Report
THERMO FISHER (TMO): Free Stock Analysis Report
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