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Bio-Rad Buys GnuBio - Analyst Blog

By: Zacks.com
Posted: 4/14/2014 6:00:00 PM
Referenced Stocks: BIO;SWY;SYK;TMO

The healthcare sector has been witnessing several acquisitions since the beginning of 2014. Stryker Corporation ( SYK ) acquired Pivot Medical, Inc. in March while ThermoFisher Scientific, Inc. ( TMO ) completed the buyout of Life Technologies Corporation in February. Major drug retailer Safeway Inc. ( SWY ) will soon be acquired by AB Acquisitions LLC., privately held and controlled by Cerberus Capital Management, L.P.    

In the same vein, Bio-Rad Laboratories, Inc. ( BIO ) also recently acquired GnuBIO, Inc. Financial details of the transaction remain undisclosed.

GnuBIO is a privately-held life sciences company that has developed a fast and fully integrated droplet-based DNA sequencing platform. The platform combines all the functions of DNA sequencing into a single, integrated workflow for medical diagnostics and research markets and delivers results within hours. Thus, this time-and-cost effective technology has clearly enabled GnuBIO to develop a competitive advantage over other sequencing technologies.

Bio-Rad reports revenues under two major segments -- Life Science and Clinical Diagnostics. Life Science accounted for 33.3% of Bio-Rad's total revenues in 2013. Growth in this segment was driven by sales from the newly acquired AbD Serotec, droplet digital PCR and cell biology product lines.

It is worth noting in this regard that Bio-Rad had acquired AbD Serotec, a division of MorphoSys AG in Jan 2013, in order to have access to AbD Serotec's comprehensive catalog of antibodies thereby boosting its portfolio.The integration of GnuBio's innovative DNA sequencing technology with the Life Science segment should strengthen Bio-Rad's foothold in the area of droplet digital PCR.

In order to expand its offerings under the droplet digital PCR system, Bio-Rad had launched PrimePCR assays in Jul 2013. These innovatively predesigned assays for mutation detection and copy number variation provide single-copy PCR resolution without a standard curve.

The Clinical Diagnostics segment contributed 66.2% of total revenue in 2013. Growth in this segment came on the back of higher revenues from quality controls, diabetes and the BioPlex 2200 system.  The DNA sequencing technology of GnuBIO seems to be appropriate for the clinical diagnostics sequencing market.

Bio-Rad has a history of successfully integrating the business and assets of the acquired firms ( the company acquired five firms since 2011) with its own business segments. However, we would like to remain on the sidelines and wait until more visibility is obtained on how well Bio-Rad capitalizes on the new technology acquired.

Currently, Bio-Rad carries a Zacks Rank #4 (Sell).



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