Life Technologies Corporation (LIFE) recently opened its India Distribution Center (IDC) in Bangalore to cater to the customer demand in the South Asian Region.
The IDC spreads over 25,000 square feet. Since inception, the volume of items shipped per day in the region has increased fourfold. Moreover, Life Technologies could meet an order in lesser time; almost 50% faster in most cases.
Life Technologies has been increasing focus on emerging markets over the past few quarters. Revenues from this region accounted for approximately 10% of total revenue in 2010. While the company had derived $188 million in 2007 from this region, it is expected to increase to $1.6 billion in 2015, representing a CAGR of 30%.
In order to drive growth in emerging markets, the company adopts strategies such as investing in infrastructure, increasing sales force and maximizing eCommerce capability. To achieve these objectives, Life Technologies has expanded its distribution network in Singapore and China as well.
The company also acquired part of LabIndia–a long-time distributor of Applied Biosystems’ products. Life Technologies is satisfied with the ongoing integration and has progressed in building a direct sales and support infrastructure for the region. These strategies, coupled with continuous investments in Asia Pacific and Latin America, should enable the company to capture the immense potential of these fast-growing regions.
Life Technologies enjoys a strong position in the life sciences market. We believe robust performance from its core business along with new product launches will help drive revenues going forward. The company is increasing its focus on emerging markets, which bode well for long-term growth.
We are also impressed by Life Technologies’ acquisition of Ion Torrent, which is expected to contribute significantly to the top line going ahead. While we are pleased with the company’s strong performance, it could face challenges such as increased competition from players such as Illumina (ILMN) and Qiagen (QGEN), and unfavorable currency movement.
We are currently ‘Neutral’ on Life Technologies, which also corresponds to a Zacks #3 Rank (hold) in the short term.
