23. Beckman Coulter
J. Robert Hurley, President & CEO (Interim)
Charles Slacik, CFO
Pamela A. Miller, Sr. VP, Supply Chain Management
Clair O’Donovan, Sr. VP, Quality & Regulatory Affairs
Scott Atkin, Exec. VP, Chemistry, Discovery & InstrumentSystems Development
NO. OF EMPLOYEES: 11,800
GLOBAL HEADQUARTERS: Fullerton, Calif.
It wasn’t so long ago—just two years, in fact—that the hunted was the hunter. Back in 2009, the big news for Beckman Counter in was its whopper deal to purchase the diagnostic systems division of Olympus’ Life Sciences business for approximately $800 million. That purchase helped the company to achieve $3.66 billion in revenues for full-year (ended Dec. 31) 2010, up 12 percent from $3.26 billion in 2009.
2010 was a year of ups and downs that culminated in bottom line growth (though just shy of Wall Street’s expectations)—and ultimately a buyout—for the California-based diagnostics firm. Danaher (see page 96) snatched up the company early in 2011 for $6.8 billion, and it became part of Danaher’s life-science and diagnostics unit.
With the merger, Beckman Coulter leaves behind a dreadful 2010 and started fresh this year. The company was forced to cope with a product recall last March, multiple financial-guidance cuts and the unexpected resignation of its CEO last fall. The company gave no reason for the resignation.
The recall of a test to measure protein that detects heart problems threw Beckman Coulter into turmoil last spring, forcing the company to set up a clinical trial to support two device approval applications with the U.S. Food and Drug Administration (FDA). The agency accused the firm of marketing a diagnostic test without the necessary clearance.
Though the test comprises a small part of Beckman Coulter’s sales—totaling $60 million of the firm’s 2010 sales—its absence from the market nevertheless represented a serious problem for the company. With the test out of commission, analysts claimed Beckman Coulter was handicapped in selling its testing instruments, providing rivals Abbott Laboratories, Roche Holding Ltd., and Siemens AG the opportunity to gain market share.
“Our view is that with several large and well-funded core lab equipment competitors poised to take advantage of (Beckman’s) missteps, winning new business with a key assay omitted will be a high hurdle,” John Sullivan, an analyst with Leerink Swann LLC, said at the time.
The compliance issues focused on the company’s AccuTnI troponin product, a medical device that measures troponin I protein, a marker for heart problems and heart attacks. The product runs on two systems—DxI and Access. In a March 22, 2010, filing with the U.S. Securities and Exchange Commission, Beckman Coulter said its AccuTnI troponin test kits, done on its DxI system, created a positive bias in results when compared to the Access system and recommended customers switch to an alternative methodology.
On Feb. 5, 2010, Beckman Coulter had sent notices to customers informing them of the defect.
Furthermore, the company said the FDA indicated to them that it believes that certain modifications to both troponin test systems were made without obtaining appropriate product clearances from the FDA, and a resubmission would be necessary.The FDA sent a warning letter on June 21, 2010, criticizing Beckman Coulter for allegedly violating agency rules by selling an “adulterated,” “misbranded” and “unapproved” version of its AccuTnI troponin test kits performed on its Access system.The FDA said a review of documentation provided by the company “reveals that you have made significant modifications that may affect the performance of your product and have not obtained marketing approval or clearance before offering your modified product for sale, which is a violation of the law.”
Though the company didn’t give a reason for his departure, Scott Garrett resigned as chairman, president and CEO in September. Most analysts said the fallout from the company’s FDA issues was part of the reason. The company’s board appointed J. Robert Hurley interim president and CEO. Hurley, who has served as the company's senior vice president, human resources and chairman of Beckman Coulter Japan, joined the company in 2005, and led the integration of the Olympus acquisition.
At the time of his departure, Garrett said, “Over the past eight years, five of them as CEO, I've had the pleasure and privilege to lead the company through many significant improvements. Today, the company continues making good progress, even in a very challenging environment. I am proud of all the employees at Beckman Coulter and believe the company is positioned to achieve its long-term potential.”
After everything was said and done, the numbers were positive overall. Recurring revenues comprised the bulk of total sales, $2.97 billion, up 12 percent from $2.65 billion in 2009. Instrument sales increased 13 percent to $694 million from $615.4.Revenues for Beckman Coulter's clinical diagnostics segment climbed 15 percent to $3.21 billion from $2.79 billion. Within that segment, immunoassay and molecular diagnostic revenues rose to $886.8 million from $798.3 million, an 11 percent hike. Revenues for the life-science segment declined 4 percent to $453.3 million from $472 million in 2009. The company’s 2010 research and development costs inched up less than 1 percent to $268.6 million from $266.4 million a year ago. Beckman Coulter’s net income for the year climbed 57 percent to $230.7 million, or $3.25 per share, compared to $147.1 million, $2.18 per share a year ago, but short of the $3.92 estimated by Wall Street.