Dr Andrew Carr
Chief Executive, Amersham Biosciences
Amersham Biosciences
Amersham Biosciences is a leading global provider of products and
services used in gene and protein research, drug discovery and development
and biopharmaceutical manufacturing.
The life science market in 2001 offered both challenges and opportunities,
following the completion of the draft sequence of the human genome.
Whilst there was a slowdown in the market demand for gene sequencing
products, especially in the high throughput centres, there was an
increased focus on research into proteins which continued to drive
the need for proteomics systems. Similarly, demand for biopharmaceutical
drugs continued unabated, leading to growth in the market for the
media and systems that are used in their production. Throughout
the year, the breadth of Amersham Biosciences’ innovative product
range and our geographical reach helped to underpin continued good
growth overall.
Sales for 2001 were £681 million, up 12 per cent. Trading
profit increased by 14 per cent to £158 million. As planned,
R&D investment in the second half of 2001 was slightly lower
than that in the first half, giving a full year investment of £86
million, up 22 per cent. Operating profit was £72 million,
up six per cent.
The significant investment in the business over the last few years
has greatly strengthened our infrastructure and product portfolio,
with several major platforms launched since 1998. Our priority now
is to improve the profitability of the business. This will be achieved
by driving increased sales of existing and new products through
the established infrastructure and improved efficiencies in product
development. At the same time we will continue to nurture innovation
and invest in people.
Separations
Our separations business is the market leader in chromatographic
systems for the purification of proteins from laboratory to manufacturing
scale. In 2001 the strong momentum in this business continued, with
sales of £268 million, up 18 per cent. Operating profit was £96
million, compared with £67 million in 2000.
Separations is ‘an established business in a young market’. Begun
over 50 years ago, it provides systems to help scientists to purify
proteins for research at the laboratory bench (laboratory separations)
and for biopharmaceutical manufacture on an industrial scale (bioprocess).
The market we serve today is a relatively recent and rapidly growing
one, having begun to emerge in the late 1980s when medicines based
on large biological molecules such as peptides and proteins were
developed for the first time. Our business continues to stride forward
as we enable the growth in licensed biopharmaceuticals. There are
now almost 100 biopharmaceuticals available to the health care community,
provided by companies such as Amgen, Eli Lily, Johnson & Johnson
and NovoNordisk, and more than 450 such products are in clinical
trials. Researchers use our laboratory separations systems at the
drug identification and development stage and then scale up to our
bioprocess systems for the FDA-licensed manufacturing process.
In 2001, good growth was seen in both parts of the separations
business. In laboratory separations we sold over 2,500 ÄKTA™
benchtop protein purification systems. Launched in 1996, this platform
now has six systems in the product range with a total installed
base of over 8,000 systems worldwide. Further ÄKTA systems
for protein research are in development.
In the bioprocess area, our instruments and media are recognised
as the industry gold standard and are used in the production of
over 90 per cent of biopharmaceutical drugs currently on the market
or in development. Several new products were launched in 2001, including
next generation Unicorn™ software used with our chromatography systems
and Primer Support™ 200, a media for large scale oligonucleotide
synthesis. Good progress was made in the ongoing development of
new bioprocess media including next generation Sepharose™ and Streamline™.
In July, Amersham Biosciences acquired Dan-Process A/S, a Danish
company specialising in high pressure chromatography instruments
for the purification of biomolecules such as peptides. The acquisition
has strengthened the separations portfolio, which had traditionally
been strong in chromatography media for peptide purification, and
enhanced the ability to offer a complete systems solution – with
both media and instruments – to biopharmaceutical customers.
In January 2002, Amersham Biosciences broadened its bioprocess
capabilities through the acquisition of two companies in the filtration
field, AG Technology and InnovaSep Technology. Filtration is a natural
extension of the chromatography business in which Amersham Biosciences
is the market leader, and these acquisitions give immediate access
to the growing filtration market. The strategic move into filtration
also provides the opportunity to develop integrated solutions combining
the current chromatography and filtration steps, making the manufacture
of biopharmaceuticals even more efficient in the future.
Drug discovery
Our drug discovery business provides high throughput systems to
improve the effectiveness of life science and pharmaceutical research
and development. Sales in 2001 grew nine per cent to £160 million,
with a trading profit of £13 million up from £7 million in 2000.
After significant investment in R&D in 2001, we had an operating
loss of £47 million compared with a loss of £35 million in 2000.
In the second half of 2001, the operating loss of £16 million compared
with a loss of £31 million in the first half. Compared with the
separations business, drug discovery is ‘a young business in a young
market’. The completion of the draft human genome in 2000 marked
a milestone in achievement, but this is just the beginning of genomics
and its related fields.
There is an increasing focus on functional biology with the goal
of understanding how gene, protein and cellular factors interact
in normal development, in disease and in individual responses to
treatment. Knowing the sequence of the genetic code is important,
but understanding the function or mechanism of action of the gene
and the protein for which the gene codes is far more valuable.
Amersham Biosciences has been pursuing functional genomics and
functional proteomics for the past few years, with major investment
in R&D to develop innovative, robust technologies in these fields.
Genomics
The launch of new technologies, together with good sales in Asia
Pacific and Latin America, helped to offset the impact of the slowdown
in the US and European sequencing markets following the very high
growth in 2000 as scientists rushed to complete the draft human
genome. Our 384-capillary MegaBACE™ 4000 was launched towards the
end of 2001. This is the highest throughput DNA analysis system
commercially available, with a four-fold increase in sequencing
capacity for the same ‘footprint’ (at no increase in instrument
size) as its predecessor, the MegaBACE 1000. MegaBACE 4000 has already
been purchased by high throughput sequencing centres around the
world.
In addition to developing high throughput systems for faster genetic
analysis, we have continued to use our expertise in molecular biology
and chemistry to develop innovative reagents and enzymes. TempliPhi™,
the new DNA template preparation kit, marks a step change in the
way in which DNA samples are produced for sequencing and with higher
efficiency being the goal in many sequencing facilities, this product
has been very well received worldwide.
Other new genomics products launched during the year included Lucidea™
Array Spotter, a state-of-the-art instrument which may be used for
spotting of high throughput, high density microarrays; SNuPE™, a
reagent kit for studying genetic variation on MegaBACE; and a version
of DYEnamic™ ET terminators for use on competitor sequencing instruments.
In addition, new application software was launched to support both
the MegaBACE and Lucidea platforms.
The litigation with Applied Biosystems Group over sequencing patents
was settled in February 2002, following a court-mediated procedure.
The settlement ends all ongoing litigation with Applied Biosystems,
brings financial benefits and enables us to access other segments
of the sequencing market. Importantly, it will also enable customers
to benefit more quickly from further innovation.
Proteomics
Proteomics represents a much larger challenge than genomics, since
the number and complexity of proteins far outweigh that of the genes
in any given organism. The discovery that there are approximately
30,000 genes in the human genome and not 100,000 as previously thought,
has given further credence to the belief that many aspects of functional
control are exerted at the protein level.
Building on the expertise and experience gained from separations
and molecular biology, Amersham Biosciences has been developing
its proteomics capability over the last few years with instruments,
media and software for protein research. In 2001, strong growth
was seen in sales of these proteomics systems, driven by well-established
market leaders such as the 2D electrophoresis systems for protein
expression analysis including 2D-DIGE. During the year, we added
two new high throughput systems to our Ettan™ range, the Ettan LCMS
(liquid chromatography mass spectrometer) for protein identification,
and the Ettan Spot Handling Workstation, enabling researchers to
integrate multiple steps in their protein studies.
Bioassays and drug screening
Amersham Biosciences is an established leader in the bioassays and
drug screening market. Pharmaceutical customers use our products
to identify and develop potential drug compounds as well as to eliminate
failures as early in the process as possible, thus minimising time
and cost spent in drug development. We have a proven track record
of market-leading technologies, with the launch of the innovative
SPA (Scintillation Proximity Assay) in 1990 and of LEADseeker™,
the high throughput primary screening system, in 1998. Both technologies
continue to be used by a large number of the world’s leading pharmaceutical
companies.
Rapid advances in genomics and proteomics, together with the improvements
in technologies for primary screening, have created bottlenecks
in secondary screening, lead validation and optimisation, the next
stages of drug development. We are providing platforms to aid researchers
in these areas of critical importance. During 2001, extensive intellectual
property was acquired for Green Fluorescent Proteins, an enabling
set of reagents used widely in biological research and drug discovery.
Our new IN Cell Analyzer, for high throughput, real-time cellular
analysis, was placed in selected customer trial sites. This combination
of instrument and reagent technology will allow real-time, cell-based
assays, thereby providing high quality information to improve efficiency
across secondary screening and ADME studies (absorption, distribution,
metabolism, excretion).
Laboratory products
Our laboratory products business provides robust and validated products
for the purification, analysis and detection of biological molecules.
Sales were £188 million, up four per cent. Operating profit was
£17 million, compared to £20 million in 2000.
The return to sales growth in laboratory products has been driven
by an increased focus on growth segments such as gene expression
and proteomics. During the year, products launched included the
next generation Typhoon™ Imager, which adds microarray analysis
to the instrument’s range of functions, and the new CyScribe™ microarray
labelling kits.
Reorganisation
Towards the end of 2001, we reorganised our internal structure,
merging the drug discovery and laboratory products areas, which
share sales and manufacturing and have a similar customer base,
and creating three application areas of genomics, proteomics and
bioassays. These three areas, together with the service business,
will be reported as ‘discovery systems’. The separations business,
with its distinct sales and manufacturing functions, remains unchanged,
but will be renamed ‘protein separations’.
The new structure gives greater accountability to each product
area and brings development and marketing functions closer together.
This will improve product development and delivery, and drive increased
profitability. The reorganisation also builds strong global business
teams at the centres of excellence around the world, with genomics
in the USA, proteomics and separations in Sweden, and bioassays
in the UK.
Outlook
Following our strong performance in 2001, Amersham is well placed
to achieve good growth in 2002, building on our global leadership
and delivering our strategy of enabling molecular medicine.
Amersham Health is expected to maintain good growth in all geographical
markets except Japan, where market conditions remain difficult due
to the general economic situation and the pharmaceutical pricing
environment. The underlying operating margins, before a small negative
impact from exchange, are expected to be at similar levels to those
achieved in 2001, despite increased investments in building the
Optison™ sales force and developing the US radiopharmacy network,
higher insurance costs and an increase in royalties payable on bulk
sales.
Amersham Biosciences is also expected to deliver good growth. Protein
separations sales are expected to be better in the second half than
the first half due to the phasing of commissioning of customers’
plants. Discovery systems should see further benefits from previous
investments and move towards profitability. Operating margins for
Amersham Biosciences are expected to increase by up to two percentage
points in 2002. This increase will be driven by growing sales, more
modest growth in R&D spend and the Applied Biosystems settlement,
these factors more than offsetting the impact of higher insurance
costs.
Sir William Castell
Chief Executive
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