ATLANTA–Serologicals Corp. announced in mid-July implementation of a program for integrating operations of its two research products subsidiaries, Chemicon International and Upstate Group, LLC, into Serologicals. Serologicals acquired Chemicon in April 2003 and Upstate in October 2004, and plans to implement the changes in 2005.
Integration, says Bud Ingalls, CFO at Serologicals, allows the company to "improve the customer development process. We want to streamline our organization to be more efficient, and we just want to improve the overall management processes that are in place." The integration, says Ingalls, is "the best way for us to increase the value of the company and drive shareholder value." Serologicals will maintain the brand names of its Upstate and Chemicon products, says Ingalls, because "customers are comfortable with those brand names and we really don't want to confuse them." The Serologicals sales force will now offer all subsidiaries' items.
Jeff Linton, president of Chemicon and Upstate, says the new system will help customers look to one company for more products. Many customers, including institutions like the National Institutes of Health, large medical schools, and pharmaceutical companies, already purchase products from both companies, so smaller clients, who only bought from Chemicon or Upstate, offer the most sales growth opportunities for Serologicals.
Serologicals aims to introduce 1,500 new products in 2005, says Ingalls, selecting areas that show opportunity for significant market penetration. The company spends seven to eight percent of its revenue on R&D, but hopes to increase that share to 10%. Ingalls projected 2005 revenue at $275-285 million.
Serologicals research products include Chemicon's stem cell research items, such as Esgro, which Linton says is used for working with mouse stem cells, and Upstate's kinase profiling products and services. Upstate, says Linton, has "the largest panel of kinases in the world and relationships with pharmaceutical companies."
Serologicals' other division, bioprocessing, accounts for about 40 percent of revenue, generated by Celliance. Bioprocessing focuses on two areas, says Ingalls: cell culture products and blood typing diagnostics products, making that segment "quite different" from research products. Bioprocessing is "heavily weighted toward industrial customers who buy the products to actually use in the production environment," he says.
Serologicals' combined products and services, says Ingalls, "go from the initial stages of target identification and evaluation, to go through drug development, through clinical trials, supporting those activities. And lastly, through drug production." Change is nothing new to Serologicals, he says, because a series of acquisitions and divestitures over the last several years means "the company has completely transformed itself from one focus on therapeutic plasma products to one focused on drug discovery, drug tools, drug production activities."
Although Serologicals estimates that efficiencies will enable annual savings of $3.0-3.5 million, the integration comes with one-time costs of $2.0-3.0 million, some of which will cover severance and relocation expenses. Ingalls says the changes will affect 80 employees; about 36 positions will be eliminated, with others being relocated. Upstate and Chemicon will continue to employ around 600 people.