Monday, March 26, 2001
Applied Biosystems set off a domino effect in the supplier
space last week when it disclosed that reduced biotech spending on capital equipment
like its flagship ABI Prism 3700 DNA sequencer would reduce its near-term growth
rate. Investors assumed that other companies would experience similar setbacks,
particularly given the overall cooling of the economy, and erased more than
$6.3 billion of value from the group of 10 supplier companies tracked by BioCentury.
But the reality among suppliers is far more nuanced. It appears
that most of the cooling trend in spending is limited to sequencers and other
big ticket items that require significant capital outlays, while suppliers of
lower priced consumables report that spending remains robust. In addition, it
seems that the slowdown in sequencer sales is more a reflection of the maturation
of the sequencer market as the genomics era comes to an end than a consequence
of the broader economic slowdown.