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Zurich, Switzerland, September 23, 2004. Tecan, a leading player in the Life Science supply industry, has initiated a set of measures to further increase operational efficiency and to help ensure regulatory process compliance. The efforts needed to implement these initiatives lead to a temporary slowdown in sales. Therefore, Tecan will not be able to offset the decrease in sales it reported for the first half of the year. EBIT in 2004 is expected to be CHF 7.5 to 10 million lower than in the previous year. In view of the positive long-term impact of the initiatives, management and board of Tecan remain cautiously optimistic for 2005.
“With our compliance review and process improvement project, we put in place the basis for sustainable profitable growth”, stated Aitor Galdos, Tecan’s CEO. Specifically, the company has accelerated measures to eliminate redundancies and to increase control by centralizing application activities in its three global Application Centers in Männedorf (Switzerland), San Jose (USA) and Kobe (Japan). The company expects this transitional process to be completed by the middle of 2005.
With these initiatives Tecan also takes into account the observations of the US Food and Drug Administration (FDA), made during the inspection of Tecan’s North Carolina operations.
Due to the additional work in implementing the various measures, Tecan will not be able to make up for the slowdown in sales it reported for the first half of this year.
The global compliance process review is a voluntary initiative of Tecan to ensure that the company remains fully compliant with FDA and In-Vitro Diagnostics Directive (IVD/D) regulations. During this program internal and external regulatory experts will conduct an in-depth analysis of current processes. “At the same time we will use this program to strengthen our position in the key strategic market of clinical diagnostics”, CEO Aitor Galdos added.
To conduct the analysis, Tecan has retained an external consulting firm, specialized in this field, and is also increasing the size of its regulatory team. The overall costs for this will be CHF 8 to 10 million, CHF 2 to 3 million of which will be effective in 2004, while the rest will occur in the years 2005 and 2006.
As a result of the lower-than-expected revenues and the additional costs for the compliance review program, Tecan reduced its revenue guidance by CHF 10 million and its EBIT guidance for 2004 by CHF 7.5 to 10 million compared to the previous year’s results (before unusual items). “We are fully convinced that the measures we are about to implement will put us in a much better position for the future and ensure a higher long-term profitability for our shareholders as well as the continued creation of superior value for our customers”, said CEO Aitor Galdos.
Tecan will publish the results for the third quarter 2004 on October 26, 2004.
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