Vision Bio chief spells out strategy

Vision BioSystems' recent acquisition of British reagent company Novocastra Laboratories is part of a broader strategy to expand into the global diagnostic instruments market, according to managing director Michael Ohanessian.

"It was time to launch under our own banner onto the global market," Ohanessian explained. "It's a monumental phase in the development of the Vision Systems group. This acquisition clearly marks a major step towards changing Vision Systems into a broader company that is very interested in biotechnology."

Vision BioSystems is one division of the larger Vision Systems, which is best known for its fire and security systems. Another division, Invetech, sells instrument development capabilities, as well as other product and process development expertise.

Vision BioSystems has been developing and manufacturing instruments for clinical histology and diagnostics for 15 years now, but up until now, most of its products have been sold under the names of other companies.

But starting with the new Bond automated immunohistochemistry and in-situ hybridisation system, launched a few weeks ago, Vision BioSystems will be marketing its own products, Ohanessian said, and expects to be a major player in the market.

Ohanessian said that the acquisition of Novocastra came about when the company was evaluating various reagent suppliers for its new product platform. The company understood the potential for vertical integration of a reagents company into Vision BioSystems, and when the right opportunity presented itself with Novocastra, Vision jumped at the chance.

"It was a match made in heaven," he said. "We're talking about the best-in-class instrument company with the best-in-class reagent company, in terms of quality. This is a purely synergistic play." While Novocastra will supply Vision BioSystems with reagents for its instrument systems, it will also keep its business as a reagent supplier to academic and other markets.

"Novocastra is a growing and profitable business in its own right. We won't be dismantling the existing business," Ohanessian said.

"By owning the reagent company we can offer total systems solutions to customers. What's exciting is that whenever we place instruments in this market we'll be generating a recurring revenue stream."

The company now will focus on developing its product platform, according to Ohanessian, explaining that they would be leveraging off their capabilities in instrument development.

Initially targeting the cancer diagnostics market, Vision BioSystems plans to market a full range of immunohistochemistry products. Systems will be sold as a package, with both the automated instrument and diagnostic tests to run on it.

In addition, Vision plans to expand the platform into automated molecular diagnostics, providing systems for gene testing, as well as looking at designing systems for microarray hybridisation.

"We intend to be a major player in histology," Ohanessian said.

As part of this growth, he said that the company would be ramping up its international sales and marketing activities over the next 12 months, both for the instrumentation side of the business and for Novocastra's reagents.

Despite Vision Bio's clear objectives, the market has not been kind to the company in the wake of the $94 million Novocastra acquisition, shaving 25 per cent off Vision Systems' market value since the June announcement.

Ohanessian puts it down to lack of investor understanding of the biotechnology industry. "The local stock market response was very disappointing for obvious reasons. But we have had an excellent response from the immunohistochemistry market and a tremendous response from the market we play in," he said.

"At the end of the day we have a good strategy."