My background has been for over a decade in Lab Automation. I still think of the industry’s future ideas being passed around at the Village Pub6 (insider reference for all the stalwarts). I have seen a number of innovative companies like V11, Axygen, SPEWare, and 4titude shake things up a bit, have a lot of fun and ultimately join up with a larger entity. There have been many attempts to break the mold as well as groups who try to rally everyone up with new standards. Overall it has been an overwhelmingly great space to be able to work in.
The last decade has taken me from a bench scientist at Invitrogen, to a manager at the robotics innovator Hamilton, the start of Brooks Life Sciences as a team builder and with Douglas Scientific helping them explore new markets for a device that helped change AgBio. Ultimately, I chose to quit the comforts of employment and roll the dice with a consumable focused startup…. All this to say, I have been lucky to have been able to see a lot…. And from many different sides.
At our industries, biggest trade show Society for Lab Automation and Screening(SLAS) there was, as always, a lot of catching up with old friends and making new ones. What I picked up on this year was a focus of the conversation from innovation, to acquisitions. Cycles are natural and we have all seen this in the past, with a couple exactions. Cutting to the chase for those who do not like to read a lot:
· Consolidation of device and consumables distribution
· Behind the scenes focus on bio-storage
· Much talk of Amazon/Google/Apple making a play in our space
Concisely, I see the M&A activity taking place with a focus on bio-storage, being used as a set-up, to make entry into our market by a big-data focused player, like Amazon. (This is a Hassett Summary, being a run-on sentence that cuts to the chase)
What is Going on?
Here is the short version:
Thomas Scientific(The Carlyle Group) acquired Dennville5 and Phenix4. I see a couple more regional distributors following those steps shortly. This is fine… Not really big news for the market. What is interesting is the push for bio-storage. The success of some of these activities is being measured by the growth of sample storage, storage devices, and support equipment. I might be missing something here but there is a big focus on specimen storage.
Brooks, as most know, started off as a mix of Nexus, REMP, and RTS3 and have acquired Aurora3, FluidX2, 4titude1 and RURO. FluidX was and still is a major supplier of 2D barcoded tubes. For those out of our industry, those are little containers that our blood/tissues/genomic material can be stored for a very long time….. This move by Brooks, and subsequently cutting off the mid-sized distributors has caused a number of smaller distributors to seek alternatives for these tubes.
Hassett Summary – Thomas Scientific is trying to build a serious competitor to Fisher and VWR with a disproportionate bias towards bio-storage while Brooks is continuing to buy up bio-storage focused device/consumable/data companies.
Why is data more valuable than Devices, Plastics or Chemistries?
My first thought to all of this activity was bolt on revenue. If a company like Brooks or Thomas Scientific wanted to grow, there are a couple ways it can do it. Organic Sales, Bolt-on Sales of Acquisitions, building something that is worth more than the sum of its parts. The latter was done with Nexus. As far as I understood it, the CEO3 was able to pool together 3 companies and place a value on them greater than the sum of their parts.
But for who? Why would companies like these want to look attractive to outsiders? Brooks is publically traded, so maybe shareholders…. But here is the bigger picture that might be going on, or might not be and I could be totally off base here.
What if the play was to establish a company that controlled the generation of data in order to entice a big-data company like Amazon to scoop them up for a sum greater than their parts? If Amazon wants to get into the space of healthcare they will need to either grow something or buy something. I am guessing they will buy something. Thermo is probably too big to buy. VWR is probably out of the question. Who else is there that would move the needle for a company like Amazon or Google? I do not see anyone in that position today. There would have to be further M&A in our industry to get on their radar.
Hassett Summary – Grow big enough and get in Amazon’s way and they could buy you.
Who could get there and how?
Brooks could if they were to round out their collection with some solid bio-informatics companies.
Thomas still has a way to go but could get there in 12 months if they keep up the strategic acquisitions.
How can a company like Amazon utilize data in ways that device companies can not?
That is a blog for another day.
What is our industry missing?
We place a value on devices, chemistry and the methods used to generate data. It is what our space has been doing for a generation now. As I was pointed out over a glass of Japanese Whiskey at SLAS, the true value of what we do is that we are the crafters of how data is being generated. All macro sciences are done with automation, all of them. High throughput, consistent, market priced devices, and integrations that allow groups to create massive amounts of data. Most data generation groups are not even close to fully utilizing the full potential of big data. Personalized Medicine is just a buzz-worded beginning to what is possible.
Hassett Summary – Those who control the data generation control the data, those who control the data have many options.
What do I see coming?
I see a handful of companies that would make great acquisition targets for growing players.
I see a company like Amazon about to pounce on our market and change it from a data generation space to a hybrid that enables us to better use big data.
I see a lot of my people in our industry sticking their heads in the sand as they fear what they don’t know.
Hassett Summary - The only constant is change.
I mostly am trying to connect dots here and may be complty off base.
My writing skills are not great.
Please let me know what you think.
Where I got my data?