Lab instrument sales index withstands economic woes.

In the second quarter of 2008, revenues for IBO's Laboratory Sales Index grew 13.7% to $4,624 million, compared to growth of 13.3% in second quarter of 2007. Operating profit climbed 20.4% to $747 million, and operating margin climbed 90 basis points to 16.2% of sales. While several companies, such as Affymetrix, Harvard Bioscience and Tecan, reported weak organic growth due to deteriorating economic conditions, other companies such as Illumina and QIAGEN NV continue to post significant revenue growth, due primarily to new product introductions.

For the second quarter of 2008, 20 of the 22 companies in the Laboratory Instrument Sales Index reported earnings before this issue's publication. For the other two companies (Horiba and Shimadzu), modest growth rates were included.

Affymetrix reported a 1.6% decline in second-quarter revenues to $86.9 million. Product revenue improved 9.7% to $75.0 million, including consumables and instrument sales of $68.9 million and $6.2 million, respectively. Consumables revenue, which includes arrays and reagents, improved 15.5% driven by strong DNA revenue, which climbed 26% to $28 million, despite declining sales of Pedegen Sciences products. RNA revenue improved 9% to approximately $41 million due to strong academic sales, which grew 12% overall. Instrument revenue fell 30.0% as sales were adversely affected by the slowdown in the pharmaceutical and industrial markets. Shipments of GeneChip Scanners declined 42% to 22 units. Service revenue fell 25.2% to $9.0 million due to slower genotyping services, while Royalties and Other revenue declined 63.3% to $2.9 million. Despite lower sales, adjusted operating loss was flat at $1.3 million, benefiting from lower legal and restructuring expenses. Gross profit margins declined 350 basis points to 55.1% of sales due to lower royalties and other income. Going forward, the company has implemented a new restructuring plan to consolidate manufacturing facilities to improve gross margins. For the year, Affymetrix lowered its revenue expectations by 7%-10% to $455-$460 million, including a one-time $90 million intellectual property payment.

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Harvard Bioscience's second-quarter revenues grew 12.9% to $23.0 million (see page 12), including 13.7% growth from acquisitions and 1.5% growth from favorable currency transactions. Organic growth declined 2.5% due to a 30% decline in sales of electrophoresis product to GE and slower sales of Asys plate readers. Overall, the spectrophotometer business grew 31%, driven by strong sales of microliter spectrophotometers, while Panlab revenue increased 72% to $1.2 million. Adjusted operating income declined 2.6% to $2.9 million because of increased operating expenses from the acquisition of Panlab (see IBO 10/15/07). Gross profit margin fell 220 basis points to 46.7% of sales due to a shift in product mix. Backlog orders jumped approximately 130% to over $7 million as of the end of the second quarter. During the quarter, the company completed the consolidation of the Asys operations from Austria into the Biochrom business in the UK. The company expects third-quarter sales to grow 10%-18% to $21-$23 million and full-year revenue to grow 13%-15% to $94-$96 million.

Illumina reported second-quarter revenue growth of 65.9% to $140.2 million. Product revenue grew 73.0% to $128.6 million, including Consumables and Instrument revenue growth of 78% and 72% to $82 million and $43 million, respectively. Revenue growth for Consumables was driven by strong sales of the new lnfinium HD, in particular the Human610-Quad, and sequencing products, which grew more than 50%. Instrument revenue benefited from strong sales of the Genome Analyzer II. Service and Other revenue improved 13.5% to make up 8.3% of sales due to increased warranty sales and genotyping service contracts. Adjusted operating profit jumped 137.0% to $30.6 million, while gross profit margins slipped 30 basis points to 64.0% of sales due to increased product costs, lower gross margins for the sequencing business and increased stock compensation expenses. Sales to the Americas accounted for approximately 70% of total sales, while Europe and Japan made up nearly 25% and 5%, respectively. For 2008, the company raised its revenue guidance by approximately 6% to $550-$560 million for growth of 50%-53%. For the third quarter, the company expects revenue growth of 46%-51% to $142-$147 million.

OI's second-quarter revenues grew 23.2% to $8.0 million (see page 12), led by a 27.8% growth in product sales to account for 90% of total revenues. Sales of core laboratory products grew 24.3% led by demand for GC products, while Minicam sales increased 15% due to Europe. Service revenue declined 5.3% to make up 10.7% of total sales. Operating income doubled to $0.5 million, while gross margins declined 70 basis points to 48.3% of sales as a result of increased product costs. The company remains cautious about sustained revenue growth following a decline in backlog orders at the end of the second quarter and the absence of any contracts for Minicams.

For the first half of the year, Tecan's revenues declined 6.4% to CHF 183.6 million ($174.9 million = CHF 1.05 = $1) from CHF 196.2 million ($160.2 million = CHF 1.22 = $1) (see page 12), primarily due to unfavorable currency transactions. In local currency, revenues improved 0.3%. The company reported strong revenue growth in its OEM business, as well as higher sales for its Liquid Handling & Robotics consumables and service businesses. However, revenue growth was adversely affected by pricing competition due to the depreciation of the US dollar against the Swiss franc. Components & Detection sales fell 12.8%, 4.8% in local currency, to make up 26.0% of sales. Sample Management revenue declined 29.0%, 27.5% in local currency, to make up 7.3% of sales, while Liquid Handling & Robotics revenue slipped 0.1%, but gained 7.0% in local currency, to make up 66.7% of total revenues, Operating profits fell 7.1%, 1.2% in local currency, to CHF 23.1 million ($22.0 million) and gross profit margins slipped 30 basis points to 50.1% of sales. For the first half of the year, sales of Life Science Research and Diagnostic products accounted for 52% and 48% of total sales, respectively. Sales to Europe, Asia and North America declined 5.8%, 20.6%, and 8.1% to represent 46.4%, 11.6% and 37.1% of total sales, respectively, while sales to Other regions jumped 86.5% to make up 4.9%. In local currency, sales to Europe and Asia fell 2.8% and 19.7%, while sales to North America and Other regions rose 6.2% and 89.9%, respectively. Tecan anticipates positive revenue growth in local currency for the year. Laboratory Instrument Index, Total

2005 2006 2007 2008 Total Annual Revenues ($M) 13903 15002 17089 -- 2nd Quarter Revenues ($M) 3363 3588 4066 4624 Annual Oper. Profits ($M) 2158 2306 2817 -- Annual Oper. Profits (%) 15.5 15.4 16.5 -- 2nd Quarter Oper. Profits ($M) 481 489 620 747 2nd Quarter Oper. Profits (%) 14.3 13.6 15.3 16.2

% Change

04/05 05/06 06/07 07/08 Total Annual Revenues ($M) 11.3 7.9 13.9 -- 2nd Quarter Revenues ($M) 9.6 6.7 13.3 13.7 Annual Oper. Profits ($M) 22.5 6.9 22.2 -- Annual Oper. Profits (%) -- -- -- -- 2nd Quarter Oper. Profits ($M) 17.3 1.6 27.0 20.4 2nd Quarter Oper. Profits (%) -- -- -- -- IBO Laboratory Instrument Sales Index companies: Affymetrix, Agilent Technologies (Bio-Analytical Measurement), Analytik Jena AG, Applied Biosystems, Bio-Rad Laboratories (Life Science), Bruker, Dionex, Harvard Bioscience, Horiba (Analytical Instruments), Illumina, Invitrogen, Luminex, 0.1. Corp., Oxford Instruments (Analytical), PerkinElmer (Life and Analytical Sciences), QIAGEN NV, Shimadzu (Analytical and Measuring Instruments), Strategic Diagnostics, Tecan, Thermo Fisher Scientific (Analytical Technologies), Varian (Scientific Instruments) and Waters.