Life Technologies, Inc.
Life Technologies, Inc.
8717 Grovemont Circle
Gaithersburg, Maryland 20877
Fax: (301) 670-1394
Sales: $272 million (1995)
Stock Exchanges: NASDAQ
SICs: 2835 Diagnostic Substances; 2836 Biological Products, Except Diagnostic Substances; 8731 Commercial Physical Research
Life Technologies, Inc. develops, manufactures, and markets products chiefly used in life science research and biomedical manufacturing, using genetically engineered cells. In 1995 its more than 3,000 products were being sold to more than 20,000 customers, including hospitals, research and clinical laboratories, and pharmaceutical and biotechnology companies. One of its biggest clients was the National Institutes of Health, which maintained dozens of laboratories on its campus in nearby Bethesda, Maryland. Life Technologies was 53.8 percent owned in 1995 by Dexter Corp., a manufacturer of specialty materials for the aerospace, automobile, food packaging, and medical industries.
Founded in 1983 Merger
Life Technologies was founded in 1983 by the merger of Bethesda Research Laboratories, Inc. and GIBCO Corp., a subsidiary of Dexter Corp. GIBCO was an amalgam of some 40 businesses acquired over a 15-year period by North American Mogul Products Co., a firm incorporated in 1915 that changed its name to Mogul Corp. in 1968 and was acquired by Dexter in 1977. GIBCO had sales of $77.3 million and net income of $4.5 million in 1982.
Bethesda Research, by contrast, was a struggling private company that, according to its chairman, Frederick Adler, was within a week to ten days from filing for bankruptcy in 1982. Adler, described in a Barron’s news story as a “flamboyant venture capitalist and turnaround artist,” laid off about half of the company’s 500 employees and lopped off marginal research and unprofitable product lines. According to Adler, Bethesda Research was on the verge of launching an initial public offering of its own when it merged with GIBCO. It became profitable during the last quarter of 1983.
Dexter took a 64 percent stake in newly formed Life Technologies. The first chairman was Adler and the first president was M. James Barrett, a microbiologist who Adler had lured to Bethesda Research from SmithKline. The firm originally had headquarters at GIBCO’s old offices in Chagrin Falls, Ohio. Net sales came to $91.4 million and net income to $3.7 million in 1983.
In 1985 Life Technologies was producing and selling more than 3,000 products used in scientific and medical research, human health diagnostics and treatment, biotechnology, and industrial applications. Among its units, the Invenex Laboratories division, located in Orlando Florida, was specializing in the production and sale of small-volume parenteral solutions such as nutritional supplements, electrolytes, antihistamines, antibiotics, diluents, anticholinergics, and generic diuretics. This division was sold to LyphoMed Inc. in 1985 for $39.5 million in cash and notes.
In 1986, the year it went public with an offering of about seven percent of its outstanding common stock, Life Technologies believed itself to be the leading supplier of sera and other cell-growth media. It was also a leading supplier of enzymes and other biological products necessary for recombinant-DNA procedures. In December of that year the company completed the sale of its Sensititre product line to Radiometer A/S, a Danish instrumentation company. By then the company had moved its headquarters to Gaithersburg, Maryland. In 1987 the company signed a technology transfer and licensing agreement with Toray Industries of Tokyo. This agreement conferred on Toray exclusive marketing rights in Japan, Korea, and Taiwan for products based on Life Technologies’ nonisotopic DNA technology for detecting hepatitis B and human papillomavirus (HPV), with the company receiving a sum of $2 million over three years.
Life Technologies had net sales of $75 million in 1984, $84.4 million in 1985, $98.3 million in 1986, and $121 million in 1987. Its net income, $4.2 million in 1984, advanced to $17.1 million in 1985, fell to $3.7 million in 1986, and rose to $11.1 million in 1987. The company announced plans in November 1987 for a $4.8 million expansion and upgrade of its cell biology operations in Grand Island, New York, to increase its production of cell biology products. Revenues increased to $130 million in 1988, and profits rose to $12 million.
Successes and Setbacks
Life Technologies beat out two other firms to win, in January 1989, approval from the U.S. Food and Drug Administration to market a test for HPV, a sexually transmitted infection linked to cervical cancer. The test was designed to be used in conbination with the Pap smear that most doctors recommended annually for female patients. This Life Technologies product was seen as providing the company with between $4 million and $5 million in revenue in 1989, and a company officer suggested this sum could reach $50 million per year within five years.
During 1989 Life Technologies introduced more than 100 products and was granted 15 patents. In July it purchased products and technology for separating different elements of blood serum from New Zealand’s Waitaki International Bio-sciences Co. for $3 million. Life Technologies’ revenues came to $134 million in 1989 ($4 million more than during the previous year), and net income rose to $13.2 million.
Life Technologies was the only profitable biotechnology company in the Washington, DC area during 1990. That year it opened a 51,000-square-foot manufacturing plant in Frederick, Maryland and a 7,500-square-foot training center in Beltsville, Maryland to offer classes to its customers on how to use the most recent research techniques and the company’s newest supplies. The company decided to drop its HPV test, however, and seek a buyer for the molecular diagnostics division, which was responsible for the test’s development. The company’s vice-president for finance told a Washington Post reporter it had been decided “that the business wouldn’t develop as quickly as we had hoped.” A research analyst estimated that the molecular diagnostics division was losing $4 million per year. It was sold in December 1990 for $3.6 million.
Life Technologies had record revenues of $151.6 million per year in 1990 and record net income of $15.4 million. Despite an economic slowdown in the United States during the year, the company benefited from a weak dollar to make half its sales overseas. It also purchased Tekmunc A/S, a Danish distributor, for $1.5 million. In February 1991, after abandoning a two-year search for a suitable acquisition, the board of Life Technologies declared the company’s first dividend, a special payment of $3.50 per share that was followed thereafter by an annual one of 20 cents per share (raised to 24 cents in 1996). With a total payout of $50 million to $52 million, or about a third of company assets, the special dividend left Life Technologies with about $5 million in cash and no debt.
During 1991 Life Technologies earned $170.9 million but, for the first time since 1986, its net income fell, to $12.1 million. It attributed this setback to the cost of making fetal bovine serum, which was used to grow cell cultures in biology research and was its most important product. The company took a charge of $1.2 million from the elimination of 40 jobs, which was equal to about five percent of its U.S. work force. It increased investment in research and development, however, to nearly $13 million and was operating in 17 countries during the year.
During 1992 Life Technologies raised its sales to $197.6 million and its profit to $15.5 million. Its production of fetal bovine serum continued to account for about 20 percent of sales. The company invested $13.9 million in research and development during the year and introduced more than 400 new cell culture and molecular biology products. Its total number of products remained about 2,000. Life Technologies acquired certain assets of Telios pharmaceuticals, Inc. for $1.3 million in October 1992.
Life Technologies had net income of $16.6 million on revenues of $205.6 million in 1993, both records in spite of a slowdown in sales to pharmaceutical and other health care companies during the second half of the year. The company blamed uncertainties about health care reform and the possibility of price controls on drugs for the sales slowdown and also cited adverse currency exchange rates on foreign sales. During the year Adler, no longer board chairman but still a director and investor, was named to the annual list of the Top 100“Molecular Millionaires” published by Genetic Engineering News. This widely read publication in the biotechnology industry valued Adler’s stock holdings in Life Technologies at $13.3 million.
Expansion in the 1990s
The revenues of Life Technologies rose to $235.3 million in 1994, and its net income increased to $18.2 million. These figures increased to $272.3 million and $22.3 million, respectively, in 1995, both records. During 1995 Life Technologies took full control of a joint venture laboratory it maintained with Protogene Laboratories Inc. for the manufacture of custom-made DNA. Previously, Protogene had owned 75 percent of the venture. Life Technologies also established wholly owned subsidiaries in Italy and Spain during 1995 and bought a majority stake in a joint venture that it had operated in Japan with Tokyo-based Oriental Yeast Co. In February 1996 it purchased Custom Primers, a manufacturer of custom oligonucleotides sold to researchers in gene sequencing and other clinical studies.
In 1996 Life Technologies was building a new $40 million red brick headquarters complex in Gaithersburg to house its administrative offices, training center, and much of its research and development facilities. Plans called for the complex to be completed around the end of 1997. The company had been leasing space in five spread-out buildings in a Gaithersburg office park a few miles from Interstate 270, Maryland’s “technology corridor.” Life Technologies was also planning to spend $60 million over five years to upgrade and expand its facilities around the world, including major research manufacturing centers in Scotland and New Zealand as well as Grand Island, New York.
Among Life Technologies’ customers in 1996 was the nation’s second largest biotech company, Genentech Inc., which was using its medium to grow the genetically altered cells composing the protein used in TPA, a drug that breaks up blood clots. Japan, Europe, and Southeast Asia were areas of major overseas business.“Boringly successful,” as the company’s chief financial officer called it, Life Technologies ranked third among 26 public biotechnology companies surveyed for profitability, with an average five-year return on equity of 14.9 percent during the first half of the 1990s.
In November 1995 Adler held 410,934 shares of the 15.2 million shares of Life Technologies common stock. All officers and directors of the companies held a combined 834,983 shares. The company’s long-term debt was only $1.4 million in March 1996. J. Stark Thompson had been the company’s president and chief executive officer since 1988.
In addition to its 30,000-square-foot leased Gaithersburg quarters, Life Technologies owned or leased, in 1995, properties in Grand Island, New York; Frederick, Maryland; Burlington, Ontario; Paisley, Scotland; Auckland, Christchurch, and Nelson, New Zealand; Roskilde, Denmark; Eggenstein, Germany; Ghent, Belgium; Cergy Pontoise, France; Basel, Switzerland; and the New Territories of Hong Kong. The Frederick, Grand Island, Auckland, and Paisley properties were in excess of 25,000 square feet. Production facilities were operating at about 85 percent of capacity during the year.
Cell culture products were being marketed under the GIBCO name and molecular biology products were marketed under the Bethesda Research Laboratories name in 1995. The former accounted for 58 percent of Life Technologies’ 1995 sales and the latter for the remaining 42 percent. Fetal bovine serum comprised 16 percent of sales. Most of Life Technologies’ products were being sold by its own sales force, but agents and distributors were also used. North America accounted for 56 percent of net sales in 1995, Europe for 36 percent, and the Pacific area for the remaining eight percent.
Canadian Life Technologies, Inc. (Canada); Laboratory Services Ltd. (New Zealand); Life Technologies A.S. (Denmark); Life Technologies Asia Pacific Inc.; Life Technologies Foreign Sales Corp. (U.S. Virgin Islands); Life Technologies GIBCO BRL Co., Ltd. (Taiwan; 51%); Life Technologies Holdings Unlimited (Scotland); Life Technologies Investment Holdings, Inc.; Life Technologies Italia S.r.l. (Italy); Life Technologies Ltd. (New Zealand); Life Technologies Oriental K.K. (Japan; 51%); Life Technologies (Pacific) Ltd. (Hong Kong); Life Technologies Pty. Ltd. (Australia); Life Technologies S.A. (Spain); Life Technologies Sweden AB (Sweden); Serum Technologies Holdings, Inc.
Day, Kathleen, “Building a Future in Biotech,” Washington Post, June 3, 1996, Bus. Sec., pp. 25-26.
Gibson, W. David, “216 Years Old and Sexy,” Barron’s, June 13, 1983, pp. 14, 18-19, 22.
Gladwell, Malcolm, “Life Technologies Faces Hurdles in Marketing Diagnostic Test,” Washington Post, January 9, 1989, Bus. Sec., p. 6.
“Life Technologies Sells Invenex Laboratories,” Wall Street Journal, June 19, 1985, p. 21B. Potts, Mark, “Life Technologies To Start Division for Medical Tests,” Washington Post, June 4, 1990, Bus. Sec, pp. 5-6.
Webb, Margaret K, “Life Technologies Expands Amid Biotechnology Slump,” Washington Post, October 29, 1990, Bus. Sec., p. 5.