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A biopharmaceutical bonanza
CHALFONT ST. GILES, England—Looking to add a high-growth company that will help it build an integrated, start-to-finish industry offering that is focused on lowering costs, increasing productivity and reducing time to market, GE Healthcare announced in early March that it reached an agreement to acquire Marlborough, Mass.-based Xcellerex Inc. The acquisition is expected to close in the second quarter of 2012. Financial terms were not disclosed.
Calling Xcellerex "a supplier of innovative manufacturing technologies for the fast-growing biopharmaceutical industry," GE Healthcare notes that buying Xcellerex will allow for expanding its offering of products and services for the manufacture of biopharmaceuticals such as recombinant proteins, antibodies and vaccines.
"The strong strategic fit between the two companies, combined with expanded capabilities in product development and marketing, will offer significant customer benefits," GE Healthcare says.
"GE Healthcare is committed to growth as a provider of innovative technologies and services for the manufacture of biopharmaceuticals and vaccines. This is an area of significant growth globally for many reasons, including the increased incidence of diseases such as cancer, arthritis and diabetes—which biopharmaceuticals often play a key role in managing," Catarina Flyborg, bioprocess product marketing leader for GE Healthcare, tells ddn. "We've got a strong track record in investment to bring new technologies to market and this is definitely something that we intend to continue—it's a key business focus for us."
Flyborg says that Xcellerex's production-scale, single-use bioreactor systems are complementary to GE Healthcare's products and range of media for cell culture, adding that Xcellerex's FlexFactory custom-designed modular production platform helps customers deploy manufacturing capacity more quickly.
Moreover, the acquisition fits not only with GE Healthcare's strategic goals but also those of its parent company, GE, whose healthymagination initiative calls for investing in and delivering products and services that help increase access, reduce costs and improve the quality of healthcare.
"GE and Xcellerex share the vision that an integrated approach, where we can help customers optimize every stage of their manufacturing process, has the potential to increase production flexibility and to deliver higher yields of finished product while reducing time to market," said Dr. Nigel Darby, vice president of GE Healthcare's BioTechnologies business and chief technology officer for GE Healthcare Life Sciences, in a news release about the deal. "With the global focus on spiraling health costs and the need for sustainable healthcare, these are critical issues for the industry."
Xcellerex has developed some very interesting technologies that are a great fit within GE Healthcare, Flyborg says.
"We're increasingly finding that our customers are looking for what we call a start-to- finish approach," she says. "Customers want more than just buying individual components—they want to work with a partner who can offer an integrated range of products and services, and a company that can help optimize every stage of their manufacturing process, both upstream and downstream."
The demand from customers for an integrated start-to-finish approach is behind many of the company's other recent acquisitions and other activities, Flyborg adds, noting that GE Healthcare has been known as an expert in protein purification, or downstream, for many years, but in 2007 it acquired WAVE Biotech, which took the company into upstream manufacturing, and in 2011 acquired PAA, a cell culture media company. In addition, GE Healthcare extended its Fast Trak training service into South East Asia to meet the needs of the rapidly growing biopharmaceutical industry there, and it recently formed alliances with engineering companies Neste Jacobs and M+W Group in late 2011 so GE could offer a turnkey approach.
"And now we've announced our plans to acquire Xcellerex," Flyborg says. "It's about linking up and integrating all the elements of the manufacturing process."
The plan is for Xcellerex to become part of GE Healthcare's BioTechnologies business. Although the integration plan is something that won't begin in earnest until after the closing of the acquisition, Flyborg says the intention right now is for the Xcellerex business to continue operating out of its existing facilities in Marlborough.
"It's really important to stress that this is about growth and development, not consolidation," Flyborg explains. "Xcellerex has a well-respected team of highly-talented staff, and we plan to invest and grow the business further. We value the highly talented team at Xcellerex and the depth of expertise and experience they have. The team has a strong track record in innovation, which will be a tremendous asset for GE Healthcare."
"We are very excited to become part of GE Healthcare's Life Sciences business. The combination of Xcellerex's people, technologies and services with the resources and global reach of GE Healthcare will allow us to bring forward our plans to grow the business," said Guy Broadbent, president and CEO of Xcellerex, in the news release about the deal.
Zacks Investment Research notes that Xcellerex's modular technology looks like it can be integrated well with GE Healthcare's cell culture products, adding in an investor note, "Also, being of a modular nature, they will go down well with customers because of easier installation. This in turn will speed up deployment, thus showing quickly on GE Healthcare's top line."