Zacks_Analysts' Blog : Life Ties Up with Pharma Majors - Analyst Blog

Life Technologies Corporation (LIFE) recently strengthened its newly created Technology Strategy Board grant consortium with the inclusion of the R&D divisions of AstraZeneca (AZN) and Johnson & Johnson (JNJ). The group expects this grant to fund the development of a commercial multi-gene next generation sequencing test, which will provide comprehensive molecular profiles of tumors and identify treatment options.

Life Technologies believes that the test will increase the speed and accuracy of cancer treatment. With the application of the next generation sequencing (NGS) and informatics, this genomic test will be commercially available in the global market. This program will attract additional pharmaceutical clinical trial investments in UK that should prove to be a major source of international investment. Thus, the consortium expects this new program to add life to the economic condition in UK and enhance job creation.  

Moreover, the consortium believes that this program will be accretive in terms of savings for the National Health Service (NHS) as it will effectively identify treatments. Market analysis indicates that more than £375 million ($560) would be saved if a mere 5% of cancer patients avoid one round of ineffective therapy.

Life Technologies enjoys a strong position in the life sciences market and earns more than 32% of its revenues from Europe. During the first quarter of fiscal 2011, the company recorded positive organic revenue growth from the Europe (up 2% year over year). We believe this new Technology Strategy Board grant consortium will drive revenues going forward. Moreover, the company is increasing its focus on emerging markets, which bode well for long-term growth.

However, the company faces stiff competition from players like Qiagen (QGEN) and Illumina (ILMN). Given the company’s exposure to international markets, unfavorable currency fluctuations will likely be a headwind going forward. Presently we remain ‘Neutral’ on Life Technologies.