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The new face of Agilent: linking the future with the past.

Agilent Technologies' Life Science and Chemical Analysis Group (LSCA) presented a new face at Pittcon 2002. Not only is the company under new leadership, but it has accelerated its move away from more mature product lines (see IBO 5/15/ 01, 6/30/01, 11/15/01, 3/15/02) and into the fast-growing life science marketplace. Like many other veteran companies, Agilent is balancing its traditional chemical analysis businesses, where it built its reputation and which still accounts for the majority of its revenue, with its new life sciences businesses, where it faces new competitors and fast changing markets. Chris van Ingen, LSCA's senior vice president and general manager, took over the division in May of last year (see IBO 5/15/01) and is charting the company's path to faster growth with an emphasis on focus, application solutions, and a strategy that encompasses both businesses.

According to Mr. van Ingen, the company has approached the life science market with a specific focus, choosing proteomics and gene expression as key areas. "I think overall in the last 9-10 months, we have refocused our strategy to make it really clear what are the spaces we will focus on, and what we will not do.... We said let's look at the key technologies we have as a company, all of our partners, and where they best fit, where is the probability of success the greatest." But focus on application area was not the only answer, he also cites "rounding out the applications portfolio" as another key move for the company. "We identified four key areas where we need to focus to be successful in gene expression and proteomics." These four areas were chemistry, equipment, information management and value-added services. Toward this end, Agilent LSCA has utilized both its internal resources and partnerships with outside companies.

Microarrays and microfluidics are among the fastest growing segments of the bioinstrumentation market, and Agilent was among the first major instrument companies to invest in both technologies. Jointly developed by Agilent and Caliper Technologies, Agilent's 2100 Bioanalyzer and LabChip kits were introduced in 1999 for DNA analysis. Since then, new software and kits have become available for the analysis of proteins, RNA, and cells. At its Pittcon press conference, Agilent announced it has sold over one thousand microfluidic units and posted 225% growth for this product line in FY2001.

Agilent entered the microarray market through its licensing of Oxford Gene Technology's microarray patents and its partnership with Rosetta Inpharmatics for its FlexJet DNA microarray technology. In late 1999, Agilent introduced its custom DNA microarray program and began volume shipments in the fall of 2000. In 2001, the company introduced its 48-slide microarray scanner. Agilent expanded into catalog arrays for gene expression by licensing Incyte's gene patent portfolio and introduced its first catalog arrays, Human cDNA microarrays, in 2001. In late 2001, Agilent gained further access to Incyte's microarray and gene expression patents. According to the company, its high volume manufacturing capacity, long probe arrays and open platform enable a fast turnaround and high quality, making it competitive with other microarray companies.

To add to its software capabilities, Agilent also partnered with Rosetta to exclusively distribute the Rosetta Resolver Expression Data Analysis System for gene expression analysis, which was released in mid 2000. Agilent has partnered with Applied Biosystems/MDS-SCIEX to offer LC/MS technologies and software. For chemistry, Agilent has a co-marketing agreement with Ambion for RNA-related reagents and with Maxim Biotech for multiplex PCR reagents. On the service end, in 2001, Agilent introduced its pharmaceutical compliance services for all manufacturers' analytical instruments in pharmaceutical industry laboratories. For FY2001, the company reported a 25% increase in compliance services and 70% growth in client/server based data systems for pharmaceutical applications.

On the instrument side, Agilent introduced its 1100 Series LC/MSD Trap and its 1100 Series Cap LC system in 2000. In 2001, it introduced the 1100 Series LC/MSD Trap with MSn capability. Agilent and Syagen Technologies developed the PhotoMate Atomospheric Pressure Photoionization source which is now part of Agilents LC/MSD systems. The company is also working with MDS Proteomics, applying its LC and separation technologies to simplify front-end sampling handling for protein analysis.

This summer Agilent will enter a new market with the introduction of its first TOF-MS at the ASMS conference. In addition, the company has plans to introduce nano LC technology and integrated solutions for drug discovery and proteomics. Among Agilent's current projects are the development of nanopore technology in collaboration with Harvard University and a $6.1 million contract with DARPA to create a two-step process for chemical synthesis of nucleic acids, to reduce the time, cost and complexity of manufacturing DNA.

"Our goal is that by the end of next year, 2003, the life sciences part of our business will be bigger than the chemical analysis business," says Mr. van Ingen. He also notes that Agilent has learned from its investments in new businesses in the past that it is now applying these lessons to its life science product lines. Specifically, he cites speed to market, customer feedback and continual product improvement as key to making new technologies successful. This also involves making such technologies a high volume business. Agilent's high-volume manufacturing ability has been key to its success and it is a strategy it is now applying to its microarray and microfluidics businesses. "We believe it's very important to get that very large footprint and capitalize on it." This rationale was also the driving force behind the decision to exit various niche product areas during last few years, including SFE, chemical sensors and GC-AED.

In addition to changes to make the life science business stronger, changes are also evident on the chemical analysis side of the business. "You have to manage a whole portfolio. Depending on where [the products] are in the maturity curve, you need a different business approach to optimize the business." In a move to lower the costs for more mature products, Agilent announced the transfer of its GC manufacturing from Delaware to China, with engineering and R&D for this product line to eventually follow. In addition, he adds, "we're even moving some of the mature LC-related products like UV-Vis and some of the detectors to Shanghai, where they can be manufactured. That's part of the operational efficiency we believe we need in order to balance the business." But cost is not the only consideration as exposing new personnel to new projects is key to motivating engineers, both in the US and abroad, according to Mr. van Ingen. As he says, you must "be very disciplined when a business becomes mature."

But Mr. van Ingen emphasizes that the life science and instrument side of the business are not disconnected. As he puts it, "A quick analysis tells you that [chemical analysis] is a highly profitable business for us, so it really is depended upon for a lot of what we do in life science." In addition, "What we count on is that a lot of what we're developing for life sciences can be leveraged into chemical analyses."

But one area where the two sides of the business do differ is distribution. Agilent's life science sales are all direct. However, its chemical analysis sales are both direct and through channel partners. Agilent uses three types of channel partners: leveraged, value-added and distribution partners. As Mr. van Ingen explained, different channels benefit different customers. "We changed our strategy about five years ago, if you're customer-centric, you work your way from the customer back into your organization." In its columns business, Agilent sells more columns through distributors than directly. Distribution is also a vital function for worldwide sales. In this regard, the chemical analysis business is looking to opportunities in Asia Pacific and Eastern Europe.

In both its life science and chemical analysis business, it is clear changes are underway. "We're trying to change from a hardware company, to really be a solutions company." For Mr. van Ingen, this means a focus on specific technologies and new approaches to interfacing with customers and maturing businesses.
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Title Annotation:Agilent Technologies
Comment:The new face of Agilent: linking the future with the past.(Agilent Technologies)
Publication:Instrument Business Outlook
Geographic Code:1USA
Date:Mar 31, 2002
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