Thermo BioAnalysis Corp.

504 Airport Road
Santa Fe, New México 87504-2108
U.S.A.
(508) 471-3232
Fax: (508) 473-9221
Web Site: http://www.thermo.com/subsid/tbal.html

Public Company
Incorporated: 1995
Employees: 979 (1997)
Sales: $139.5 million (1997)
Stock Exchanges: AMS
Ticker: TBA
SICs: 3823 Industrial Measuring Instruments; 3826 Laboratory Analytical Instruments; 7373 Computer Integrated Systems Design

Thermo Bioanalysis Corp. designs, manufactures, and markets instruments, consumables, and information management systems for use in biopharmaceutical research and production, as well as in clinical diagnostics. The company focuses on three principal product areas: Instrumentation, Information Management Systems, and Health Physics.

The History of “Spin-Out” vs. “Spin-Off” at Thermo Electron

Thermo BioAnalysis is considered by its parent company, Thermo Instrument Systems Inc.—and its ultimate parent company, Thermo Electron Corp.—to be a “spin-out” company, as opposed to a “spin-off.” George Hatsopoulos, chief executive officer (CEO) of Thermo Electron, differentiates between the two, since his subsidiaries are created to stand on their own, but are not cast off by the parent. Instead, of the ten or so first-generation spin-outs from Thermo Electron, all of them are still partially-owned by the parent company, which is itself a leading manufacturer of environmental monitoring equipment, biomedical, and health equipment.

Hatsopoulos, whose uncles and cousins were successful in technical fields but failures in business, vowed to succeed in both. He received degrees in both engineering and thermodynamics from Massachusetts Institute of Technology, and then founded Thermo Electron in 1956. The company made its initial public offering in October 1967.

Thermo Instrument, Thermo BioAnalysis’ parent company, is merely one of ten or so first-generation spin-outs of Thermo Electron. Other first-generation spin-outs include Thermedics, Thermo Fibertek, Thermo Power, Thermo TerraTech, and Thermo Trex. Each of the first-generation spin-outs has second-generation spin-outs orbiting it, and some even have third- and fourth-generation spin-outs.

Thermo Instrument—at various incarnations known as Thermo Water Management Inc., Thermo Environmental Corp., Thermo Instrument Systems, and Thermo Instrument Systems NV—made its public offering in 1986. The company manufactures instruments to identify chemical compounds, monitor pollution and radioactivity, and control industrial processes. It also makes precision measurement equipment, spectrometers, analytical optical and biochemical instruments, and industrial process optimization systems. Furthermore, the company offers services for information management systems.

Thermo Bioanalysis operated as part of Thermo Instruments from 1992–94. Total revenue for 1992 reached $24.5 million—with a net income of $2.5 million—and climbed slowly in 1993 to a total revenue of $25.1 million. In 1994, however, it slipped back to $22.5 million.

Thermo Bioanalysis Flies Solo in 1995

The following year, the company was incorporated in the State of Delaware as a wholly owned subsidiary of parent Thermo Instrument Systems Inc., and a part of its ultimate parent—Thermo Electron Corp.

Most of Thermo Bioanalysis’ history consists of acquisitions of other smaller satellite companies, and of Thermo Bioanalysis’ dealings with and connections to other subsidiaries of its parent, Thermo Instruments. The company’s business has remained the same throughout the short duration of time that it has stood on its own; the names and entities that have surrounded it are what has mainly changed.

In February 1996, the company acquired substantially all of the assets of DYNEX Technologies Inc.—a division of Dynatech Corporation—for approximately $43.2 million. DYNEX Technologies, founded in 1960, brought $18 million in annual sales and over 100 employees to Thermo Bioanalysis in addition to its analytical laboratory instruments expertise, and line of products. DYNEX Technologies Inc., manufactured in vitro diagnostic instrumentation and plasticware for the worldwide diagnostics marketplace. DYNEX was the original developer of microtiter technology and is the world’s leading supplier of microtiter technology products for clinical, research, and industrial markets.

MALDI-TOF, a manufacturer of matrix assisted, laser desorption ionization time-of-flight (MALDI-TOF) spectrometry instruments, was acquired by Thermo Bioanalysis in 1995. MALDI-YOF was created in the 1970s to provide analytical biochemists and polymer chemists with a new power for the characterization of their samples and materials in research and quality control. It was spun-off as the MALDI-TOF Division of Finnegan MAT Ltd., which, in 1991, was the first company to introduce MALDI-TOF mass spectrometry to the analytical biochemistry industry.

The Eberline Connection

Eberline Instruments was founded by Howard C. Eberline, formerly a group leader for the development of Health Physics instrumentation at the Los Alamos Scientific Laboratory in Los Alamos, New Mexico. By 1958, Eberline Instruments was spun off as a separate corporation held by REECO. In 1963, Howard Eberline left the company to start another enterprise, called Eberline and Associates.

Eberline Instruments quickly acquired Capco (an industrial capacitor manufacturer) and Thermal Engineering Corporation (an air conditioning company), and invested in Missouri Research Laboratories Inc., Madison Research Inc., and CEP Geonuclear Corp. The company also dabbled in real estate, and created a laboratory services division, which produced radioactive sources for calibration, personnel dosimetry, consulting, radiochemistry, bio-assay, and environmental services.

Eberline Instruments remained public until its purchase in 1979 by Thermo Electron, when it was eventually divided into two separate companies: Eberline Instruments, which continued to produce radiation monitoring equipment out of Santa Fe, and TMA Eberline, which provided all of the laboratory services now located in Albuquerque. Eberline Instruments became a subsidiary of Thermo Instruments (and an eventual sibling to Thermo Bioanalysis), and TMA Eberline became a subsidiary of Thermo Environmental. Thus, Thermo Bioanalysis, upon its creation, operated in synch with Eberline Instruments as its younger sibling.

Eberline has grown to become the world leader in the design and manufacture of radiation detection and counting instrumentation and sophisticated radiation monitoring systems. It has a diversified product line covering everything from simple hand-held Geiger counters up to complex integrated digital radiation monitoring systems installed at major nuclear facilities around the world. The company has a long history in the supply of detection instrumentation, repair and calibration services, as well as supplying radioactive sources.

Other Acquisitions and Connections

There were a few other notable companies with which Thermo Bioanalysis was connected soon after its spin-out. In March 1996, Thermo Bioanalysis’ parent, Thermo Instruments, acquired a substantial portion of the businesses comprising the Scientific Instruments Division of Fisons PLC, a wholly owned subsidiary of Rhone-Poulenc Rorer Inc. That July, the company acquired the Affinity Sensors Division (a manufacturer of optical biosensors for the scientific community) and the LabSystems Division (a provider of services in laboratory information management systems, chromatography data systems, and instrument integration systems) of Fisons PLC for $9 million in cash.

Affinity Sensors manufactures optical biosensors which allow analysis of molecular interactions in real time. The company’s interest in evanescent wave biosensors started in the mid-1980s. In 1987 the company joined in research collaboration with GEC-Marconi and The Institute of Biotechnology at The University of Cambridge, to investigate a new generation of evanescent wave sensors, the resonant mirror, resulting in the creation of IAsys technology. The technology enabled biomolecular interaction analysis to be performed in real-time without labels for determination of kinetic profiles, molecular recognition, analyte concentration, and affinity purification. This allowed biochemists in the pharmaceutical, biotechnology, and medical research fields to rapidly study the concentration and functional properties of biomolecules and thereby aid custom design of molecules with specific characteristics. Some of Affinity’s products have included the IAsys cuvette system and the IAsys Auto +.

Company Perspectives:

Thermo BioAnalysis Corp. is dedicated to providing the technology, manufacturing infrastructure, and marketing capabilities to meet the growing opportunities in bioinstrumentation.

LabSystems was founded in 1971 with the philosophy to seek new challenges and provide answers for healthcare, research, and industrial laboratories. The company holds more than 180 original patents and specializes in the design, implementation, and support of laboratory automation solutions worldwide, providing one of the world’s leading laboratory information systems and instrument integration packages. The company has also worked to provide a leading chromatography data system for use in research and development, quality assurance and quality control, and processing plants in a variety of industries including chemical, pharmaceutical, environmental, oil and gas, petrochemical, plastics, food, agricultural, and medical.

The LabSystems group of companies grew to comprise Liquid Handling, Microplate Instrumentation, Biotechnology, and Affinity Sensors. In 1997, a new complementary area, Biosensor Products, became part of the company, and UK-based Denley Instruments Inc. was merged with LabSystems.

Thermo Bioanalysis’ Market in the Late 1990s

By 1997, the pharmaceutical, biotech research, and bioinstrumentation industries were increasing research efforts, with the market being estimated in the $2-2.5 million range. Analysts predicted prospects for continued annual growth of 10-20 percent, as the demand for advanced testing, test validating, data calculation, storage equipment and consumables expanded. Combinatorial chemistry was helping labs such as Thermo Bio-analysis engage in pharmaceutical product development to expand the use of microtiter plates. Thermo BioAnalysis owns the registered trademark on the pioneering brand name in the microtiter plates segment—Microtiter.

In May of that year, the company purchased Helsinki, Finland-based LabSystems OY and England-based Hybaid Ltd. from parent Thermo Instrument in a $50 million transaction. Hybaid, based in the UK, was a leading manufacturer and supplier of equipment and reagents for molecular biology laboratories worldwide. Hybaid was founded in 1986 with the goal of developing applications-oriented products to semi-automate labor-intensive molecular biology procedures. In collaboration with the research community, Hybaid developed an extensive product line encompassing many molecular biology applications. In 1995, the company introduced its own range of consumables for nucleic acid extraction procedures, under the “Hybaid Recovery” brand name. The acquisition gave Thermo Bioanalysis access to this knowledge and technology.

Also that year, the company acquired Life Sciences International PLC’s Clinical Products Group, itself a different “Thermo” company, in a $66.7 million stock swap from parent Thermo Instrument. The acquisition allowed Thermo BioAnalysis to build on its core bioinstrumentation business. DNA amplification was revolutionized in the 1980s by a simple technique involving a thermophillic enzyme, which operates in hot water and shuts down in cold. Isolated from a deep-sea vent worm, this polymerase allowed DNA to be copied like an old-fashioned mimeograph machine. The mechanism is a simple rocker arm that alternately dips the sample from cold water to hot water, thereby starting and stopping the reaction. Through the Life Sciences purchase, Thermo BioAnalysis became licensed to exploit this market, which previously had been dominated by Perkin-Elmer.

With 350 employees in 1997, sales units in 11 countries (including two joint ventures in China), a well-established worldwide distributor network supporting the company, and private labels and original equipment manufacturers working with the company—Thermo Bioanalysis continued to grow.

In March 1998, Colin Maddix, previously president and CEO of Life Sciences International and also of ThermoSpectra Corporation, both subsidiaries of Thermo Instruments, succeeded Barry S. Howe as president and CEO of the company. In May, the company filed for its initial public offering of stock.

In July of that year, the company acquired Arlington, Texas-based Data Medical Associates Inc. (DMA) in a $5.2 million cash transaction, naming Bret Hendzel, president of subsidiary ALKO Diagnostic, president of the new acquisition. The acquisition of DMA further expanded Thermo BioAnalysis’ influence in the clinical diagnostic market, and broadened the company’s product line for the chemistry, blood gas, and electrolyte analyzer markets. It also gave the company access to the latter’s independent distribution network, which marketed products through distributors and original equipment manufacturers in more than 40 countries worldwide.

Early in 1998, Millennium Pharmaceuticals Inc. and The Wyeth-Ayerst Research Division of American Home Products Corp. together discovered two previously unidentified human genes that appear to play a role in central nervous system disorders. The first gene, which is brain-specific, modulates a key nerve impulse transmission channel, and the second “may provide insights into the molecular basis of psychiatric disorders,” according to Jim Barrett, Wyeth-Ayerst’s Vice President of Research, in a July 1998 article in Knight-Ridder/Tribune Business News. Additionally in 1998, The U.S. Food and Drug Administration granted subsidiary BioTransplant Inc. clearance to begin first-phase and second-phase clinical studies to evaluate its AlloMune system as an aid to reduce organ rejection in kidney transplant patients.

In this always changing environment in a industry based on changes and discovery, the company continues to grow, following George Hatsopoulos’ vision. Although it faces vigorous competition, moving into the twenty-first century as a powerhouse in the bioinstrumentation industry seemed to be an achievable goal.

Principal Subsidiaries

Alko Diagnostic; Benelux Thermo BioAnalysis GmbH (Germany); Fastighets AB Skrubba; Limited Life Sciences International; Thermo BioAnalysis (Guernsey) Ltd.; Thermo BioAnalysis Holding, Limited; Thermo BioAnalysis Ltd. (England); Thermo BioAnalysis S.A.

Principal Divisions

BioMolecular Instruments Division; DYNEX Technologies Inc. (Chantilly, VA); Dynatech Laboratories SPOL. S.R.O.; DYNEX Technologies (Asia) Inc.; DYNEX Technologies GmbH (Germany); DYNEX Technologies Limited (England); Eberline Instrument Corp. (Santa Fe, NM); Capillary Electrophoresis Division (Santa Fe, NM); MALDI-TOF; Shandon Labsystems Group; Affinity Sensors Division; Biosensor Products Division; Biotechnology Division; Liquid Handling Division; Microplate Instrumentation Division.

Further Reading

“The Boston Globe Business Notes Column,” Knight-Ridder/Tribune Business News, July 15, 1998, p. OKRB98196066.

“Life Sciences Unit Agrees to $66.7 Million Stock Deal,” The Wall Street Journal, May 14, 1998, p. A12.

Macdonald, A. L. “Thermo Bioanalysis—Company Report,” Lehman Brothers, Inc., May 20, 1997.

“Thermo BioAnalysis Acquires Data Medical Associates, Inc.,” PR Newswire, July 13, 1998, p. 713NEM026.

“Thermo BioAnalysis Appoints New Chief, Considers Buying Firm,” The Wall Street Journal, March 13, 1998, p. B8.

“Thermo Bioanalysis Corp.,” The New York Times, June 15, 1998, p. C11.

“Thermo BioAnalysis Corp.,” The New York Times, May 18, 1998, p. C10.

“Thermo BioAnalysis Corp.,” The Wall Street Journal, June 18, 1998, p. B13.

“Thermo Bioanalysis Corp.—History & Debt,” Moody’s Investors Service, April 23, 1998.

“Thermo BioAnalysis Gets Approval to Buy Unit of Parent Firm,” The Wall Street Journal, April 22, 1998, p. A4.

“Thermo Bioanalysis to Buy Another Thermo Business,” The New York Times, May 14, 1998, p. C4.

—Daryl F. Mallett