The news follows a 22 per cent reduction in revenues in the first half of this year for the German company, which in turn comes on the back of stagnant sales since 2001.
Trimming down the business will accelerate MWG's return to long-term profitability, said the company, although it will also impact the company's results in the short term. While not going into details, the Ebersburg-based company said a 'negative deviation' on total turnover and result is probable.
MWG acquired its microarrays business (Genomic Diagnosis) in 2000, and offers a range of DNA 'biochips' based on laboratory animals (rat, mouse, zebra fish, etc) and the human genome.
Meanwhile, the Genomic Technology (lab automation) division has been focusing on the development a self-developed series of automated biosystems robots, but delays in orders - including a major one from Bayer for 100 instruments - and competition in the market for polymerase chain reaction (PCR) technologies have held back the business. The Bayer project has now progressedto the beta testing stage.
Tough times
A spokesperson for MWG explained that the microarray business had been hit by the general downturn in the biotech sector, which meant that market predictions for the microarrays market made in 2002 have not been met.
"Two to three years ago, compound annual growth rates of 30 to 40 per cent were expected in this sector, but the latest reports have reduced this to around 15 per cent," she said. Moreover, the complex licensing scenario for microarrays used in genomic expression studies, with royalties needing to be paid to either Affymetrix or OGT, have affected the business.
Meanwhile, the lab automation sector has gone through a difficult period in which spending by academia has declined and outsourcing companies have been less willing to undertake capital investments.
In addition, MWG has had its own internal difficulties. Genomics Technologies had originally made use of a platform that was eventually acquired by rival company Qiagen, prompting the company to develop a proprietary platform. But this was not considered to be competitive in the marketplace, and the project was halted.
Now MWG has developed an new liquid handling platform alongside Switzerland's CS, called Theonyx, that it believes has all the hallmarks of a market leader.
So why divest it? The spokesperson pointed out that MWG's core customer base is on that buys commodities, where fast-moving, service-orientation and price competitiveness are the key. It does not have the scale to handle a slower-moving, capital investment type of market as well, she noted.
MWG's management has not yet arrived at any firm strategy for the divestment, and it is said to be looking at a number of options. Meanwhile, the company said it is planning to raise additional funding.