Mr. Mackay: The sectors I cover include medical devices, diagnostics and science tools.
TWST: What are some of the companies you follow?
Mr. Mackay: In science tools, I follow Illumina (ILMN), Luminex (LMNX), Waters
(WAT) and Life Technologies (LIFE). A good portion of QIAGEN's (QGEN) business
is also in science tools, as is a portion of Sangamo BioSciences' (SGMO) and
Beckman Coulter's (BEC).
TWST: What are the prospects for these companies in the short and long term?
Mr. Mackay: In the short term, many companies in the science tools sector have
been hit by the financial uncertainty and the global recession over the past
year. This has manifested itself in a number of ways. There have been pullbacks
in the capital budgets of many of their commercial customers. Biotechs have had
a tough time raising money, and some pharmas have been cutting back on R&D.
Academic research has been impacted by losses to university endowments. These
are the kinds of effects that we started to see early in 2008. Of the names that
I mentioned, cap ex budget pullbacks have most seriously hit the instrument
sales that constitute large portions of revenue for Waters, for the science
tools segment of Beckman Coulter and Luminex. Happily there have been some
moderating effects. One has been that the consumable budgets of these companies'
customers have not been so adversely affected. Another is that many of these
instrument sellers have been streamlining operations and cutting costs. Life
Technologies stands out in this regard in the aftermath of Invitrogen's (IVGN)
acquisition of instrument-heavy Applied Biosystems. There has been some success
in insulating bottom-line earnings from fluctuations in top-line revenue.
Tickers included in this excerpt: AMGN, BEC, BMY, DHR, DOW, GHDX, ILMN, IVGN, LIFE, LLY, LMNX, MDZ, MYGN, QGEN, SGMO, SIAL, TGEN, WAT
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