BioWorld International Correspondent

PARIS - Eurofins Scientific declared its ambition of becoming a global leader in the supply of laboratory services to the biopharmaceutical industry following its takeover of Focus Bio-Inova.

Based in Paris and with clinical trial central laboratories in both the French capital and Washington, Focus Bio-Inova (known as FBI) is specialized in providing laboratory testing services and tailor-made microbiological testing in the area of antibiotic resistance. FBI earned revenues of more than $15 million in 2005 and employs about 115 people.

Eurofins Scientific said the acquisition of FBI not only strengthens its own Eurofins Pharma Services division, which has a turnover of more than $100 million a year and employs 700 people, but also gives it a significant presence in the U.S.

Based in Nantes, France, but with its operational headquarters in Brussels, Belgium, Eurofins Scientific is a leader in analytical testing for the food industry, having developed proprietary methods for verifying the botanical and biological integrity of foodstuffs and beverages. It specializes in the detection of living organisms and genetically modified organisms in foodstuffs, beverages and other botanical or biological materials.

The company pointed out that the market has been boosted by the sharp increase in the number of alert notifications concerning food and feed safety and contamination in the European Union. The trend led Eurofins Scientific to become the first company to develop a test for bovine spongiform encephalopathy (BSE) in living animals, and the first to introduce a test for the H5N1 bird flu virus in food.

The company also has an environmental testing business and is the world leader in dioxin testing, for instance. Its revenues totaled €233 million (US$293.4 million) in 2005 and are expected to top €300 million in 2006. Its net profit bounded by 77 percent to €13.8 million in 2005, from €7.8 million in 2004 (and just €1.7 million in 2003). Its medium-term objectives are to double revenues again to €600 million by 2010 and to be generating an operating margin of 15 percent of sales by 2008.

CEO Gilles Martin said Eurofins Scientific now is capitalizing on the trend toward outsourcing of testing and analytical services in the biopharmaceutical industry by offering a one-stop-shop of laboratory testing services spanning the drug discovery and development cycle. It estimates the global value of the laboratory services market for the biopharmaceutical industry at €4 billion to €5 billion a year and said it is growing at more than 10 percent a year.

With the acquisition of FBI, Eurofins says it has achieved critical mass, becoming the No. 1 CRO in France, where it has six specialized subsidiaries, and one of the leaders in Europe. Its customers include eight of the world's top 10 pharmaceutical companies.

Eurofins Scientific has built up its pharmaceutical services business in Europe through a series of acquisitions that brought it both new technologies and new business. It took over five European firms in 2005 - Pharmacontrol and Optimed in France, GAB Biotechnology in Germany, Agrisearch in the UK and finally the VirAlliance diagnostics business of Paris-based BioAlliance Pharma SA last November. VirAlliance developed a predictive phenotyping assay called Phenoscript that measures resistance in infections such as HIV, which it marketed in Europe but more especially in the U.S. As a result, VirAlliance was taken over by the U.S. subsidiary of Eurofins, Eurofins Scientific, Inc., of Memphis, Tenn.

As Martin pointed out, the company's financial results reflect the economies of scale it is deriving from the increasingly intense exploitation of its laboratories and the horizontal synergies it is able to exploit from its different activities and subsidiaries, such as the ability to analyze drug-gene interactions and drug-drug interactions. He declined to disclose the price paid to acquire FBI, but indicated that Eurofins' rule of thumb was to pay five to eight times earnings or one to two times revenues. In that regard, he said Eurofins planned to grow organically in the U.S., since acquisition costs there were too high.

Eurofins Scientific recently raised €120 million through an issue of bonds with redeemable warrants and subscription rights to existing shareholders.