Products from Agilent Technologies have a measurable effect on the scientific world. A leading maker of scientific testing equipment, Agilent supplies a slew of analytical and measurement instruments, including gas and liquid chromatographs, mass spectrometers, vacuum pumps, anatomic pathology workflows, and genetic and diagnostic instruments and tools. Its operations include products used in the pharmaceutical, biotechnology, chemical and energy, food, and environment and forensics markets.
Agilent operates through three business segments: life sciences and applied markets, Agilent CrossLab, and diagnostics and genomics.
The life sciences and applied markets business brings in more than 45% of Agilent's revenue by providing instruments and software that customers use to identify, quantify, and analyze the physical and biological properties of substances and products.
The Agilent CrossLab business accounts for about 35% of its business and offers products and services that span the entire lab. Solutions range from chemistries and supplies to services and software helping to connect all functions within the laboratory environment.
Diagnostics and genomics generates close to 20% of Agilent's revenue from its genomics, nucleic acid contract manufacturing, pathology, companion diagnostics, reagent partnership, and biomolecular analysis businesses. This segment focuses primarily on the diagnostics and clinical markets, mostly in North America, Western Europe, and Japan.
The US is Agilent's largest single geographic market, accounting for about 30% of sales. China, the only other country Agilent reports separately, accounts for more than 20%. Other international operations provide the remainder of revenue. The company has manufacturing and R&D facilities in the US, Europe (UK, Germany, Italy, Belgium, the Netherlands, and Denmark), Asia (China, Japan, Malaysia, and Singapore), and Australia.
Sales and Marketing
Agilent sells most of its products through direct sales, and also through resellers, distributors, and e-commerce channels. The company focuses on two types of customers—research customers, which include those in pharma and biotech, generics, contract research organizations (CROs), and contract manufacturing organizations (CMOs) and clinical customers, comprising high-complexity clinical testing labs and pathology labs.
The company’s advertising costs are about $40 million annually.
Agilent has maintained steady growth over the last several years with a 10% increase to $4.9 billion in 2018 (ended October) from $4.5 billion in 2017, driven by stronger sales in each of the company's three segments. Foreign currency exchange rates increased its overall earnings by 2% in 2018.
The life sciences and applied markets business showed a 9% increase due to strong growth in the pharmaceutical market, as well as in the chemical and energy and the environmental and forensics markets. In diagnostics and genomics, business increased 10% in 2018 compared to the previous year, led by growth in the company's genomics, companion diagnostics, and biomolecular analysis businesses. In Agilent CrossLab, growth in the pharmaceutical and food markets boosted sales by 11%.
After posting a 48% gain in net income in 2017, Agilent's profits dipped back 54% to $316 million in 2018 due to a $552 million tax provision related to the Tax Cuts and Jobs Act. Income before taxes was actually up 18% from 2017 to 2018.
Cash at the end of fiscal 2018 was $2.2 billion, a decrease of $431 million from the prior year. Cash from operations contributed $1.1 million to the coffers, while investing activities used $704 million, mainly for acquisitions. Financing activities used another $797 million for loan payments, dividends to stockholders, and the company's stock repurchase program.
Agilent has identified four key initiatives to drive growth: making further investments in R&D, acquiring companies with complementary technologies; penetrating new high-growth geographies, and focusing on digital innovation both internally and externally.
The company expects to invest more than $1 billion on research and development in the next three years. It has introduced innovative new products such as the 8700 Laser Direct Infrared (LDIR) Chemical Imaging Systems for the pharmaceutical, biomedical, and food industries; the HRP Magenta product for its Dako Omnis instrument, which allows pathologists to more easily visualize cancer in skin and lung tissue; and the Cary 3500 UV-Vis system for chemical imaging and spectral analysis. Agilent has also developed and launched new software supporting the Allotrope Data Format, a standardized data format for the pharmaceutical industry, allowing labs to transfer and share data across platforms.
Agilent also looks to external sources for technologies. The company made seven acquisitions in 2018 alone that have helped expand its product lines for diagnostics, therapeutics, and genomics research.
The company continues to pursue opportunities in China, where revenue surpassed $1 billion for the first time. It opened a new logistics hub in Shanghai, enabling faster product deliveries to labs throughout Asia Pacific and plans to establish four additional stocking locations for faster service in this region.
Digital investments are serving to boost Agilent's e-commerce business through initiatives such as e-renewal of support contracts and its WeChat platform in China. It is also digitizing its own back-office functions, order fulfillment, and manufacturing operations, resulting in lower costs.
Mergers and Acquisitions
Agilent Technologies has been active in acquisitions in the past two or three years to add technologies to its portfolio. The deals are part of the company's effort to provide customers with more workflow-specific consumables and tools.
Late in 2018, the company completed the acquisition of San Diego-based ACEA Biosciences Inc., a developer of cell analysis tools, for $250 million. ACEA specializes in cellular function and metabolism measurements focused on real-time, live-cell analysis. Agilent also purchased ProZyme, a provider of glycan reagents, kits, and standards, in 2018. The deal fortifies Agilent's position in glycobiology, a fast-growing part of the biopharma sector. Another 2018 acquisition was Ultra Scientific, a provider of chemical standards and certified reference materials.
Also in 2018, Agilent Technologies acquired Luxcel Biosciences, a developer of real-time fluorescence plate-reader–based in vitro cell-assay kits. The deal expands Agilent's cell-analysis portfolio with Luxcel assay kits designed for ease of use and compatible with industry-standard plate readers. Other 2018 acquisitions include Advanced Analytical Technologies, Inc., a provider of capillary electrophoresis-based solutions for analyzing molecules; Genohm, a developer of software for laboratory management; and Lasergen, Inc., an emerging biotechnology company focused on technologies for DNA sequencing.
In 2017 Agilent purchased Cobalt Light Systems, a provider of differentiated raman spectroscopic instruments, for more than $50 million. The acquisition puts Agilent into the fast-growing spectroscopy sector. The 2017 acquisition of Multiplicom N.V., added Multiplicom's molecular diagnostics kits to Agilent's genomics portfolio.
Agilent Technologies was formed in 1999 when Hewlett-Packard (HP) split off its measurement business. But Agilent's roots run as deep as HP's—Agilent's core products served as the original business of Stanford-trained electrical engineers William Hewlett and David Packard. The friends started HP in 1939 as a test and measurement equipment maker. In 1999, HP formed Agilent as a separate company for its test and measurement and other non-computer operations, which by then accounted for 16% of sales.
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Employer Type: Publicly Owned
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