Affymetrix Expands

Well, I was right that Affymetrix (Nasdaq: AFFX  ) was planning to use the proceeds from sales of its senior notes to purchase a company, but I guessed wrong in which way it was going to expand.

Yesterday, the Rule Breakers pick and biochip maker announced that it was purchasing laboratory-reagent maker USB for about $75 million in cash. The privately held USB makes enzymes and molecular purification systems that compete with the likes of Invitrogen (Nasdaq: IVGN  ) and QIAGEN (Nasdaq: QGEN  ) . Its products are distributed by General Electric's (NYSE: GE  ) health care division, but there's no word yet if Affymetrix will integrate the products into its own distribution system or stick with the status quo.

Frankly, I'm a little surprised at the move. I thought Affymetrix was going to let rival Illumina (Nasdaq: ILMN  ) stick with expanding into other laboratory supplies and instead concentrate on its diagnostics business. Expanding its laboratory products does have one advantage for Affymetrix: In my experience, a lot more laboratories use the types of products that USB sells than Affymetrix's biochips. The USB purchase gets Affymetrix a foot in the door to these other labs, where it can extol the virtues of biochips, thus expanding the biochip market and its market share at the same time.

But I still think that Affymetrix should concentrate on its diagnostics business. Given Roche's repeated attempts to purchase Ventana Medical Systems (Nasdaq: VMSI  ) , it's clear to me that diagnostics is the next wave of personalized medicine. Of course, even after subtracting out the $75 million, Affmetrix still has cash to make other purchases, so a pickup in the diagnostics arena isn't out of the question. Investors will have to wait until the end of next month at Affymetrix's year-end earnings call to get the full scoop on the direction the company is headed.

More Foolishness on lab supply companies:

Help us in our goal to give every young person around the globe a financial education. Learn more about the new direction of Foolanthropy, now in its second decade, here.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 556675, ~/Articles/ArticleHandler.aspx, 10/26/2014 3:47:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement