07.29.15
$9.4 Billion ($19.9B total)
KEY EXECUTIVES:
Joyce Jr., President and CEO
Daniel L. Comas, Exec. VP and Chief Financial Officer
Mark A. Beck, Exec. VP, Head of Dental Business
William H. King IV, Sr. VP, Strategic Development
Daniel A. Raskas, Sr. VP, Corporate Development
Rainer Blair, VP and Group Executive, Life Sciences
Arnd Kaldowski, VP and Group Executive, Diagnostics
NO. OF EMPLOYEES: 71,000 (total)
GLOBAL HEADQUARTERS: Washington, D.C.
Conglomerate. noun. /kƏn’glämƏrƏt/ 1. a number of different things or parts that are put or grouped together to form a whole but remain distinct entities.
Washington, D.C., certainly isn’t a medical device hub. Aside from the lobbying that takes place in the city on the industry’s behalf and the laws enacted that impact how the sector does business, D.C.’s not a hotbed of medtech innovation. A block away from George Washington University Medical Center and roughly seven blocks from the White House in the heart of D.C.’s Foggy Bottom neighborhood, however, is headquartered Danaher Corp. You won’t find the Danaher name or logo on many, if any, life-science technology products, but you’ll find plenty of venerable company monikers familiar to life-sciences professionals under the Danaher corporate umbrella. Danaher is a true conglomerate, owning subsidiaries and their respective brands in the following five sectors: Test & Measurement, Dental, Industrial Technologies, Environmental, and Life Science & Diagnostics.
The company has made careful, solid acquisitions its business, from which—company officials, of course, hope—follows organic growth. In that respect, so far, so good.
The company’s Life Science & Diagnostics division had $7.19 billion in sales for fiscal 2014 (ended Dec. 31, 2014), up from $6.86 billion in 2013. Dental revenue was $2.19 billion, up slightly from $2.09 billion. Profit for Life Science & Diagnostics was $1.11 billion, up from $1.01 billion for fiscal 2013. Dental division earnings were $304.4 million, down slightly from $304.9 million. (For the purposes of MPO’s list of top companies, we include the 2014 performances of both the Life Science & Diagnostics and Dental sectors.)
Of the 5 percent growth recorded from fiscal 2013 to 2014 for the Life Science and Diagnostic sector, existing businesses grew 4.5 percent; acquisitions were responsible for 2 percent growth; and currency exchange rates slowed revenue growth by 1.5 percent. In the Dental sector, existing businesses accounted for 3 percent of the sector’s 4.5 percent year-over-year growth; acquisitions drove revenue gains 3 percent; and currency exchange rates hurt top-line expansion by 1.5 percent.
Sales for the Life Science & Diagnostic segment by geographic destination were: North America, 37 percent; Europe, 29 percent; Asia/Australia, 27 percent; and all other regions, 7 percent. In fiscal 2014, sales for the company’s Dental division holdings by geographic destination were: North America, 51 percent; Europe, 32 percent; Asia/Australia, 11 percent; and all other regions, 6 percent.
Company revenues across all divisions for fiscal 2014 increased 4 percent to $19.9 billion. Net earnings were $2.6 billion, or $3.63 per share on a diluted basis.
The company’s diagnostic businesses offer a range of analytical instruments, reagents, consumables, software and services that hospitals, physician offices, reference laboratories and other critical-care settings use to diagnose disease and make treatment decisions. Life-sciences businesses provide research and clinical tools that scientists use to study cells and cell components to understand the causes of disease, identify new therapies and test new drugs and vaccines. Danaher’s dental businesses focus on consumables, equipment and services that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, and to improve smile aesthetics.
The Buys Have It
For 2014, acquisitions played a big part, as usual, in the story of Danaher’s life-science businesses. The company made two high-profile acquisitions toward the end of the year.
In October, Danaher’s Leica Biosystems, a manufacturer of anatomic pathology laboratory solutions and instruments, agreed to acquire Devicor Medical Products Inc., a maker of breast biopsy instruments and consumables, with annual revenues of approximately $170 million. Devicor, headquartered in Cincinnati, Ohio, has more than 550 employees and sells products in more than 50 countries around the world. Financial terms and conditions of the deal were not disclosed.
The acquisition of Devicor moves Leica Biosystems “further upstream in anatomical pathology to the biopsy, providing better sample control and delivering higher levels of diagnostic quality and confidence,” company officials said.
“Leica Biosystems’ products and solutions address the key steps across the anatomic pathology workflow. The addition of Devicor’s market leading breast biopsy products, especially Mammotome, allows us to further integrate that workflow from the source, starting with the patient and the biopsy sample,” said Matthias Weber, M.D., president of Nussloch, Germany-based Leica Biosystems. “This acquisition supports our mission of advancing cancer diagnostics to improve lives by adding products that will have direct benefits for the patients and the clinicians who care for them.”
Among Devicor’s products is the Original Mammotome Breast Biopsy System, which, to date, has enabled more than four million women to have a minimally invasive breast biopsy. Devicor’s product portfolio also includes the Mammotome revolve, the tether-less Mammotome elite, Neoprobe Gamma Detection System, Mammotome MammoTest stereotactic biopsy table, as well as a comprehensive portfolio of tissue markers used in breast disease diagnostic sampling and management.
Devicor now operates as a standalone business within Leica Biosystems and continues to be led by Tom Daulton, CEO of Devicor. “Our portfolio of products is highly complementary with Leica’s. We are excited about our future as part of Leica. Integrating the pathology workflow will open the door to further improve efficiency, diagnostic quality and patient outcomes,” said Daulton.
In September, Danaher Corp. agreed to acquire Nobel Biocare Holding AG for $2.2 billion. Nobel Biocare, a Swiss maker of dental implants, had been searching for a buyer amid the recent wave of consolidation in the medical technology industry. The deal was completed by December. Nobel Biocare became part of Danaher’s Dental segment. Henk van Duijnhoven, senior vice president of Danaher’s Dental segment, said at the time of the acquisition: “Nobel Biocare has a very strong track record as an innovator and leader in the attractive market for dental implant and prosthetic solutions. Bringing Nobel Biocare’s deep expertise in implant dentistry, digital prosthetics and software together with our extensive knowledge in 3-D imaging, intraoral scanning and digital restorative solutions will further enable us to optimize clinical workflows to the benefit of patients and dental practitioners. This combination will help us build a strong platform for future growth.”
Danaher paid 17.10 Swiss francs a share in cash, creating—according to Danaher officials—the world’s largest maker of premium dental implants. Danaher bought a business with sales that still hadn’t recovered from the recession and financial crisis that began in 2008. After peaking at 90.75 francs in 2007, Nobel Biocare traded below 20 francs for more than three years. As unemployment soared, people cut back on implants because they often aren’t covered by insurance.
Danaher officials said the firm’s annual sales from the dental industry will approach $3 billion after the purchase, giving it an “unmatched position” in dental implants as Nobel Biocare will expand the company’s presence in the premium segment of the market. The company expects the purchase of Nobel Biocare to return 10 percent on invested capital by 2019 and add 5 cents a share to earnings in 2015 and 10 cents a share the following year.
“Nobel Biocare’s broad reach and leadership position make it one of the strongest global brands in the dental industry today,” said Danaher’s president and CEO, Thomas P. Joyce Jr. “We believe that application of the Danaher Business System will provide Nobel Biocare with a unique opportunity to further accelerate growth, expand margins, strengthen its market presence and develop innovative solutions for dental patients and practitioners around the world.”
Danaher is likely to continue hunting for deals, Chief Financial Officer Daniel Comas said on a conference call, and the company has more than $8 billion for acquisitions.
Leadership Transition
Fiscal 2014 also was a period of leadership change for Danaher.
In September, Danaher’s board of directors appointed Joyce as president and CEO and a member of the board. Joyce’s predecessor, H. Lawrence Culp Jr., took on a senior advisory role. The transition had been announced in April and originally wasn’t slated to take place until 2015, but the move happened sooner than previously planned. Joyce began his career at Danaher in 1989 as a marketing project manager in the Danaher Tool Group. From 2006 until his CEO appointment, he was an executive vice president, with responsibility for more than $9 billion of annual revenues, including Danaher’s Life Sciences & Diagnostics and Water Quality businesses. He led the acquisition and integration of many of Danaher’s leading brands, including Beckman Coulter Inc., AB Sciex and ChemTreat.
During Culp’s tenure, Danaher’s revenues increased approximately five-fold to nearly $20 billion and its market capitalization grew to more than $50 billion. At the same time, shareholder returns have outpaced the S&P 500 Index by a factor of five, according to the company. Under his leadership, Danaher greatly expanded its global reach with particular emphasis in the high growth markets, increasing sales in these markets ten-fold to $5 billion. Culp began his career at Danaher in 1990 and served as president and CEO beginning in May 2001. He will serve as a senior advisor to Joyce, the board and the rest of the leadership team until March 2016.
Earlier in the year, in March, Danaher promoted Rainer Blair to vice president and group executive with responsibility for Danaher’s $2.5 billion Life Sciences platform, which includes AB Sciex, Leica Microsystems, Beckman Coulter Life Sciences and Molecular Devices. Blair served as the president of AB Sciex since February 2011. Jean-Paul Mangeolle was hired as president at AB Sciex in July 2014. Arnd Kaldowski was promoted to vice president and group executive with responsibility for Danaher’s $4.5 billion Diagnostics platform, which includes Beckman Coulter, Leica Biosystems and Radiometer. Kaldowski remains president, diagnostics, for Beckman Coulter.
KEY EXECUTIVES:
Joyce Jr., President and CEO
Daniel L. Comas, Exec. VP and Chief Financial Officer
Mark A. Beck, Exec. VP, Head of Dental Business
William H. King IV, Sr. VP, Strategic Development
Daniel A. Raskas, Sr. VP, Corporate Development
Rainer Blair, VP and Group Executive, Life Sciences
Arnd Kaldowski, VP and Group Executive, Diagnostics
NO. OF EMPLOYEES: 71,000 (total)
GLOBAL HEADQUARTERS: Washington, D.C.
Conglomerate. noun. /kƏn’glämƏrƏt/ 1. a number of different things or parts that are put or grouped together to form a whole but remain distinct entities.
Washington, D.C., certainly isn’t a medical device hub. Aside from the lobbying that takes place in the city on the industry’s behalf and the laws enacted that impact how the sector does business, D.C.’s not a hotbed of medtech innovation. A block away from George Washington University Medical Center and roughly seven blocks from the White House in the heart of D.C.’s Foggy Bottom neighborhood, however, is headquartered Danaher Corp. You won’t find the Danaher name or logo on many, if any, life-science technology products, but you’ll find plenty of venerable company monikers familiar to life-sciences professionals under the Danaher corporate umbrella. Danaher is a true conglomerate, owning subsidiaries and their respective brands in the following five sectors: Test & Measurement, Dental, Industrial Technologies, Environmental, and Life Science & Diagnostics.
The company has made careful, solid acquisitions its business, from which—company officials, of course, hope—follows organic growth. In that respect, so far, so good.
The company’s Life Science & Diagnostics division had $7.19 billion in sales for fiscal 2014 (ended Dec. 31, 2014), up from $6.86 billion in 2013. Dental revenue was $2.19 billion, up slightly from $2.09 billion. Profit for Life Science & Diagnostics was $1.11 billion, up from $1.01 billion for fiscal 2013. Dental division earnings were $304.4 million, down slightly from $304.9 million. (For the purposes of MPO’s list of top companies, we include the 2014 performances of both the Life Science & Diagnostics and Dental sectors.)
Of the 5 percent growth recorded from fiscal 2013 to 2014 for the Life Science and Diagnostic sector, existing businesses grew 4.5 percent; acquisitions were responsible for 2 percent growth; and currency exchange rates slowed revenue growth by 1.5 percent. In the Dental sector, existing businesses accounted for 3 percent of the sector’s 4.5 percent year-over-year growth; acquisitions drove revenue gains 3 percent; and currency exchange rates hurt top-line expansion by 1.5 percent.
Sales for the Life Science & Diagnostic segment by geographic destination were: North America, 37 percent; Europe, 29 percent; Asia/Australia, 27 percent; and all other regions, 7 percent. In fiscal 2014, sales for the company’s Dental division holdings by geographic destination were: North America, 51 percent; Europe, 32 percent; Asia/Australia, 11 percent; and all other regions, 6 percent.
Company revenues across all divisions for fiscal 2014 increased 4 percent to $19.9 billion. Net earnings were $2.6 billion, or $3.63 per share on a diluted basis.
The company’s diagnostic businesses offer a range of analytical instruments, reagents, consumables, software and services that hospitals, physician offices, reference laboratories and other critical-care settings use to diagnose disease and make treatment decisions. Life-sciences businesses provide research and clinical tools that scientists use to study cells and cell components to understand the causes of disease, identify new therapies and test new drugs and vaccines. Danaher’s dental businesses focus on consumables, equipment and services that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, and to improve smile aesthetics.
The Buys Have It
For 2014, acquisitions played a big part, as usual, in the story of Danaher’s life-science businesses. The company made two high-profile acquisitions toward the end of the year.
In October, Danaher’s Leica Biosystems, a manufacturer of anatomic pathology laboratory solutions and instruments, agreed to acquire Devicor Medical Products Inc., a maker of breast biopsy instruments and consumables, with annual revenues of approximately $170 million. Devicor, headquartered in Cincinnati, Ohio, has more than 550 employees and sells products in more than 50 countries around the world. Financial terms and conditions of the deal were not disclosed.
The acquisition of Devicor moves Leica Biosystems “further upstream in anatomical pathology to the biopsy, providing better sample control and delivering higher levels of diagnostic quality and confidence,” company officials said.
“Leica Biosystems’ products and solutions address the key steps across the anatomic pathology workflow. The addition of Devicor’s market leading breast biopsy products, especially Mammotome, allows us to further integrate that workflow from the source, starting with the patient and the biopsy sample,” said Matthias Weber, M.D., president of Nussloch, Germany-based Leica Biosystems. “This acquisition supports our mission of advancing cancer diagnostics to improve lives by adding products that will have direct benefits for the patients and the clinicians who care for them.”
Among Devicor’s products is the Original Mammotome Breast Biopsy System, which, to date, has enabled more than four million women to have a minimally invasive breast biopsy. Devicor’s product portfolio also includes the Mammotome revolve, the tether-less Mammotome elite, Neoprobe Gamma Detection System, Mammotome MammoTest stereotactic biopsy table, as well as a comprehensive portfolio of tissue markers used in breast disease diagnostic sampling and management.
Devicor now operates as a standalone business within Leica Biosystems and continues to be led by Tom Daulton, CEO of Devicor. “Our portfolio of products is highly complementary with Leica’s. We are excited about our future as part of Leica. Integrating the pathology workflow will open the door to further improve efficiency, diagnostic quality and patient outcomes,” said Daulton.
In September, Danaher Corp. agreed to acquire Nobel Biocare Holding AG for $2.2 billion. Nobel Biocare, a Swiss maker of dental implants, had been searching for a buyer amid the recent wave of consolidation in the medical technology industry. The deal was completed by December. Nobel Biocare became part of Danaher’s Dental segment. Henk van Duijnhoven, senior vice president of Danaher’s Dental segment, said at the time of the acquisition: “Nobel Biocare has a very strong track record as an innovator and leader in the attractive market for dental implant and prosthetic solutions. Bringing Nobel Biocare’s deep expertise in implant dentistry, digital prosthetics and software together with our extensive knowledge in 3-D imaging, intraoral scanning and digital restorative solutions will further enable us to optimize clinical workflows to the benefit of patients and dental practitioners. This combination will help us build a strong platform for future growth.”
Danaher paid 17.10 Swiss francs a share in cash, creating—according to Danaher officials—the world’s largest maker of premium dental implants. Danaher bought a business with sales that still hadn’t recovered from the recession and financial crisis that began in 2008. After peaking at 90.75 francs in 2007, Nobel Biocare traded below 20 francs for more than three years. As unemployment soared, people cut back on implants because they often aren’t covered by insurance.
Danaher officials said the firm’s annual sales from the dental industry will approach $3 billion after the purchase, giving it an “unmatched position” in dental implants as Nobel Biocare will expand the company’s presence in the premium segment of the market. The company expects the purchase of Nobel Biocare to return 10 percent on invested capital by 2019 and add 5 cents a share to earnings in 2015 and 10 cents a share the following year.
“Nobel Biocare’s broad reach and leadership position make it one of the strongest global brands in the dental industry today,” said Danaher’s president and CEO, Thomas P. Joyce Jr. “We believe that application of the Danaher Business System will provide Nobel Biocare with a unique opportunity to further accelerate growth, expand margins, strengthen its market presence and develop innovative solutions for dental patients and practitioners around the world.”
Danaher is likely to continue hunting for deals, Chief Financial Officer Daniel Comas said on a conference call, and the company has more than $8 billion for acquisitions.
Leadership Transition
Fiscal 2014 also was a period of leadership change for Danaher.
In September, Danaher’s board of directors appointed Joyce as president and CEO and a member of the board. Joyce’s predecessor, H. Lawrence Culp Jr., took on a senior advisory role. The transition had been announced in April and originally wasn’t slated to take place until 2015, but the move happened sooner than previously planned. Joyce began his career at Danaher in 1989 as a marketing project manager in the Danaher Tool Group. From 2006 until his CEO appointment, he was an executive vice president, with responsibility for more than $9 billion of annual revenues, including Danaher’s Life Sciences & Diagnostics and Water Quality businesses. He led the acquisition and integration of many of Danaher’s leading brands, including Beckman Coulter Inc., AB Sciex and ChemTreat.
During Culp’s tenure, Danaher’s revenues increased approximately five-fold to nearly $20 billion and its market capitalization grew to more than $50 billion. At the same time, shareholder returns have outpaced the S&P 500 Index by a factor of five, according to the company. Under his leadership, Danaher greatly expanded its global reach with particular emphasis in the high growth markets, increasing sales in these markets ten-fold to $5 billion. Culp began his career at Danaher in 1990 and served as president and CEO beginning in May 2001. He will serve as a senior advisor to Joyce, the board and the rest of the leadership team until March 2016.
Earlier in the year, in March, Danaher promoted Rainer Blair to vice president and group executive with responsibility for Danaher’s $2.5 billion Life Sciences platform, which includes AB Sciex, Leica Microsystems, Beckman Coulter Life Sciences and Molecular Devices. Blair served as the president of AB Sciex since February 2011. Jean-Paul Mangeolle was hired as president at AB Sciex in July 2014. Arnd Kaldowski was promoted to vice president and group executive with responsibility for Danaher’s $4.5 billion Diagnostics platform, which includes Beckman Coulter, Leica Biosystems and Radiometer. Kaldowski remains president, diagnostics, for Beckman Coulter.