From complex DNA sequencing in pioneering research laboratories and high-volume laboratory testing in hospitals to simple single-use diagnostic screening kits used in physicians’ offices, Beckman Coulter is the world’s largest company devoted solely to biomedical testing. We estimate this market had about $40.8 billion in worldwide sales in 2009. Tracing our origins to 1935, we are a leading manufacturer and marketer of biomedical testing instrument systems, tests and supplies that simplify, automate and innovate complex laboratory processes. Our inspiration is to improve patient health and reduce the cost of care with products that fall into two basic categories:
Clinical Diagnostics, which represent over 85% of our total revenues, produce information physicians use to diagnose disease, make treatment decisions and monitor patients in hospitals and other critical care settings around the world. We estimate that 65% of health care decisions are based on critical diagnostic information produced by laboratory-based testing. Our clinical diagnostic customers include hospitals, physician’s offices and reference laboratories. Central laboratories of mid- to large-size hospitals represent our most significant customer group.
Life Science research instruments and tools, which generate less than 15% of total revenues, are used by scientists to study complex biological problems including the causes of disease, identifying new therapies and testing new drugs. Our Life Science customers include pharmaceutical and biotechnology companies, universities, medical schools and research institutions.
Our revenue is about evenly distributed inside and outside of the United States. In 2009, about 81% of our total revenue was generated from recurring revenue consisting of consumable supplies (including reagent test kits), service and operating-type lease payments.
Incorporated in Delaware in 1988, we have approximately 11,800 employees in 136 facilities on six continents, all dedicated to improving patient health and reducing the cost of care in more than 160 countries in which our products are sold.
This Comprehensive Product Portfolio chart is a representative listing of our products and our competitors’ products. Not all products are included in the chart.
Market estimates and share amounts are approximate and are based on external surveys and internal estimates. For additional information regarding our business segments and geographic information see Note 18 “Business Segment Information” of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.
Beckman and Coulter combine two of the best known brand names in laboratories. We adopted our current name in April 1998, changing from Beckman Instruments, Inc. to Beckman Coulter, Inc. (the “Company”), to reflect the October 1997 acquisition of Coulter Corporation.
Beckman Instruments, Inc., founded by Dr. Arnold O. Beckman in 1935, entered the laboratory market with the world’s first pH meter, an electronic instrument used to measure pH (acidity or alkalinity). The company became a publicly traded corporation in 1952. In 1968, Beckman Instruments, Inc. expanded its laboratory instrument focus to include healthcare applications in clinical diagnostics. We were acquired by SmithKline Corporation to form SmithKline Beckman Corporation in 1982, operating as a subsidiary of SmithKline Beckman until 1989, when we once again became a publicly owned company.
Coulter Corporation was founded by Wallace and Joseph Coulter in 1958 as a private company, remaining under the control of the Coulter family until acquired by Beckman Instruments, Inc. in 1997. Coulter invented the “Coulter Principle” in 1948 to automatically count and characterize particles and reduced it to practice for the medical field in an instrument used to determine the distribution of red and white cells in blood. This proved to be the foundation of automated hematology.
We believe the Beckman and Coulter names have become two of the most valuable brand names in biomedical testing for a number of reasons: Our installed base of more than 200,000 systems operating in laboratories in more than 160 countries Our breadth of product offering and “building block” designs provide laboratories with broad-based testing capability that is highly configurable and flexible Our world class menu of more than 600 clinical diagnostics tests, capable of meeting nearly 100% of hospital-based routine laboratory testing needs BEC 2009 FORM 10-K
Our development capabilities across chemical, biological, hardware and software disciplines enable a prolific flow of new systems to meet customer requirements for simplifying, automating and innovating laboratory testing Our first mover approach has enabled us to be the first to provide islands of automation, the first to develop an integrated centrifuge and the first with refrigerated post-analytical storage. With the leading market share in the United States, we are the recognized leader in total laboratory automation.
Major trends support increased worldwide demand for our products including an aging population, the explosion in biological understanding, growth of outreach testing and the ever-present focus on increased efficiency and lower costs.
Our core strategy is to simplify, automate and innovate biomedical testing processes. Our strategic initiatives for 2010 continue our focus on growth, quality and operating excellence:
We are integrating our recent acquisition of the diagnostics systems portion of Olympus Corporation’s business or Olympus. In 2009 we completed the Olympus acquisition to extend our Clinical Diagnostics chemistry and automation product offering and enhance our geographic reach and scale. We expect to substantially complete the Olympus integration by mid-2010 and to realize additional synergies as the integration progresses.
We are working to expand our test menu, particularly in our immunoassay and molecular diagnostics products and believe our focus on certain disease states will enable us to deliver enhanced testing capability to our customers, which will ultimately improve patient health and reduce the cost of care.
We are building on our industry-leading ability to help customers simplify, automate and innovate their processes. Our unparalleled knowledge of customers’ laboratory processes supports our expansion of automation and work cells, growing our installed base of instruments.
From a geographic perspective, we are increasing resources in developing markets, including China, which we believe will improve our opportunities for long-term growth.
We intend to continue to reduce product, service and operating costs by streamlining our supply chain operations and expanding our use of “Lean Six Sigma” tools to other business processes throughout the company.
We have announced that we plan to design and build an automated, fully integrated molecular diagnostic sample to result system to enable moderately complex testing in clinical diagnostic laboratories. Product development costs for the project are anticipated to be about $30 million per year at least through 2012, excluding any test menu licensing fees.
As part of our strategic initiatives, we expect to incur charges as we integrate Olympus, realign our manufacturing and distribution footprint and implement initiatives to improve productivity and reduce operating costs in the future.
Customers and Markets
We provide the critical laboratory tools that enable our customers to:
Conduct basic research into the fundamental processes of human biology
Develop vaccines and drugs to treat disease
Conduct clinical trials and related research activities
Perform tests ranging from simple patient blood analysis to complex diagnostics
Our customers are the hospitals, laboratories, research centers and physician’s offices that are continuously searching for processes and systems to help them perform these types of tests faster, more efficiently and at a lower cost. To meet these needs, we seek to leverage our investment in research and development (“R&D”) and to use our core competencies in systems integration, applications, distribution and service to create systems that meet customer requirements.
Since mid-2005, most of our instruments have been provided to customers under cash sales or operating type lease or OTL arrangements, rather than the sales-type lease or STL arrangements that we previously utilized. We provide OTLs under bundled lease arrangements, in which our customers pay a monthly amount for the instruments, supplies, test kits and service. Our lease arrangements primarily take the form of what are known as “reagent rentals” where an instrument is placed at a customer location and the customer commits to purchase a minimum volume of reagents annually. We also enter into “metered” contracts with customers where the instrument is placed at a customer location with a stock of reagents and the customer is billed monthly based on actual reagent usage.