JRH acquisition strengthens Sigma's strategy
division (JRH) for $370 million (€282 million) in cash, extending
its presence in the cell culture product sector and consolidating
its position in the burgeoning functional genomics market.
JRH, which is a global supplier of cell culture and sera products to the biopharmaceutical industry, provides a range of product lines that include sera, cell culture media used in the production of therapeutic proteins, reagent growth factors and biological material containers.
Sigma-Aldrich funded the acquisition with a combination of existing cash, short-term debt and three-year term debt. Including funding for this acquisition, Sigma-Aldrich expects to remain within its targeted debt to capital ratio of 30-35 per cent during 2005.
The acquisition of JRH by Sigma-Aldrich, strengthens the direction in which David Harvey, Sigma-Aldrich's chairman and CEO, is taking the life sciences company. Functional genomics and systems biology is a broad market currently experiencing large growth due to the introduction and wide scale acceptance of genomic tools, especially siRNA technology.
Frost and Sullivan's analysts estimate target validation to generate $146.4 million (€112.5 million) or just under 50 per cent of total RNAi market revenues, followed by research with $97.6 and therapeutics with $56.0 million by 2010.
Speaking after the acquisition of Proligo, a global supplier of genomics research tools, from Degussa last month, Harvey said: "The acquisition is another key step in our strategy to provide tools that fully meet the research needs of scientists in the rapidly growing field of genomics."
He added: "Proligo will provide us with one of only four exclusive licenses to a key Massachusetts Institute of Technology patent application that covers the use of RNA in gene silencing, the new frontier in genomics research."
The acquisition strengthened Sigma's own existing Sigma-Genosys business, supplying phosphoramidite raw materials from which synthetic DNA and RNA are made. Formerly Genosys Biotechnologies, the company was acquired by Sigma-Aldrich in December 1998 and maintains manufacturing facilities in Texas, US; Cambridge, U.K.; Hokkaido, Japan and Sydney, Australia.
In October 2004, Sigma-Aldrich's partnership with Ingex, to develop and market their gene disruption technology (TargeTron) has become a tool that has featured prominently in functional genomics and systems biology. It incorporates technology that exploits the retrohoming ability of group II introns, which "target" the exact position of gene disruption.
The TargeTron technology aims to fill a specific niche of the drug discovery market that looks at prokaryotic organisms for potential drug targets. Providing targeted, stable knockouts as well as the potential to perform functional genomics studies on difficult organisms such as clostridium perfringen, is set to become a prominent aspect of future drug discovery processes.
The deal follows a string of investments that Sigma-Aldrich has made. A licensing arrangement with Rubicon in whole gene amplification with its GenomePlex, grants Sigma-Aldrich exclusive worldwide rights to GenomePlex for the production and sale of kits to the research market.
In addition, Sigma also gained access in March 2004 to a proprietary technology held by Seoul, South Korea-based Seegene through a new licensing agreement.
Sigma-Aldrich earned $193 million on nearly $1.3 million in sales during 2003. The company has more than 6,000 employees worldwide, including about 1,700 at its main headquarters in St. Louis, US.
