peer m. schatz managing director and cfo 6th german ......•magnetic bead technology •thin...
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Peer M. Schatz
Managing Director and CFO
6th German Corporate Conference, Frankfurt, February 25, 2003
Peer M. Schatz
Managing Director and CFO
6th German Corporate Conference, Frankfurt, February 25, 2003
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29-Jan-03
Forward Looking Statements
Certain of the statements contained in this presentation may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN's products and markets and operating results are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations), variability of operating results, the commercial development of the DNA sequencing, genomics and synthetic nucleic acid-related markets, as well as the nucleic acid-based molecular diagnostics and genetic vaccination and gene therapy markets, competition, rapid or unexpected changes in technologies, fluctuations in demand for QIAGEN'sproducts (including seasonal fluctuations), difficulties in successfully adapting QIAGEN’s products to integrated solutions and producing such products, the ability of each of QIAGEN to identify and develop new products and to differentiate its products from competitors, and the integration of acquisitions of technologies and businesses. For further information, refer to the discussion in reports that QIAGEN has filed with the U.S. Securities and Exchange Commission (SEC).
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29-Jan-03
QIAGEN’s Mission
QIAGEN QIAGEN
is the world´s leading provider of is the world´s leading provider of
innovative enabling technologies innovative enabling technologies
for the separation,for the separation,
purification and handling ofpurification and handling of
DNA and RNA.DNA and RNA.
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29-Jan-03
QIAGEN at a Glance
Revenues: 2002: $ 298.6 million 96–02 CAGR: 33%Net income: 2002: $ 33.3* million 96–02 CAGR: 36%*EPS: 2002: $ 0.23* 96–02 CAGR: 34%*
Product range: • Approx. 320 consumable products• Instrumentation• Increased range of in-licensed technologies
IP: • 246 issued patents, 201 pending patents• Over 400 patents under license
Customers: 400,000 scientists worldwide
* excluding one-time charges related to the acquisition of GenoVision A.S. as well as restructuring charges related to the closing of QIAGEN Genomics, Inc.)
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29-Jan-03
QIAGEN’s CustomersAcademic and Industrial Academic and Industrial
Research MarketResearch Market
GenomicsGenomics & Drug & Drug Development
Molecular Molecular DiagnosticsDevelopment Diagnostics
Gene TherapyGene Therapy
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29-Jan-03
Building Blocks of Life Science Applications
BacteriaBacteriaCells Cells Tissue Tissue BloodBlood
Roche Roche BiochemicalsBiochemicalsLife TechnologiesLife Technologies//InvitrogenInvitrogenAmershamAmersham PharmaciaPharmaciaSigmaSigmaPromegaPromegaNew England New England BiolabsBiolabsBD BD ClontechClontechApplied Applied BiosystemsBiosystems
DNA/RNADNA/RNApreparationpreparation
BioassayBioassay
Applied Applied BiosystemsBiosystemsMolecular DynamicsMolecular DynamicsMolecular DevicesMolecular DevicesAffymetrixAffymetrix
DetectionDetection
BiologicalBiologicalsamplesample
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29-Jan-03
Extraction of Nucleic Acids
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29-Jan-03
QIAGEN Product DimensionsBi
olo
gic
al
Biolo
gic
al
sam
ple
ssa
mp
les
BacteriaBacteria
Tissue Tissue
BloodBlood
ggD
NA
DN
A
SequencingSequencingSNPSNP--GenotypingGenotyping
MicroarraysMicroarraysOthersOthers ((CloningCloning, PCR...), PCR...)
AssaysAssays//ApplicationApplication
tt RN
ARN
A
pD
NA
pD
NA
Vir
al R
NA
Vir
al R
NA
mRN
Am
RN
A
mt
mt D
NA
DN
A
Oth
ers
Oth
ers
Expression ProfilingExpression Profiling
VirusesViruses
AnimalAnimal
PlantsPlants
Nucleic Acids/Genetic Information FormatNucleic Acids/Genetic Information Format
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29-Jan-03
QIAGEN Technologies
• Solid-phase anion-exchange chromatography• Selective adsorption on silica surfaces• Filtration• Magnetic bead technology• Thin membrane technology• Hybrid capture on latex beads• Endotoxin removal• Cationic detergent technology• Dendrimer technology for transfection
• Over 240 issued patents, over 240 pending applications• Over 400 patents under license
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29-Jan-03
Purification Achieved at Low Relative Cost
LaborLabor
QIAGENQIAGENproductsproducts
LaborLabor
OffOff--thethe--ShelfShelfChemicalsChemicals
Traditionalmethods
QIAGENQIAGENsolutions
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29-Jan-03
QIAGEN is substituting traditional methods
Competitors
Mar
ket s
hare
TraditionalMethods
100%
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29-Jan-03
The QIAGEN Solution
Traditional method QIAGENQIAGEN
Time 24–48 hours 20 –25 minutes
Purity Low High
Ease of use — +
Nontoxic reagents — +
Automation possible — +
Scaleup possible — +
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29-Jan-03
Competitive Environment
QIAGEN
Traditional methods
Traditional methods
Ran
ge
of
ap
plic
at
Commercial Competitors
ion
Customer benefit
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29-Jan-03
Manual Users 99%
Instrument Users 1%
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29-Jan-03
QIAGEN’s Instrumentation Business
QIAGEN BioRobots differ from other instrumentation businesses due to:
• Other than a generic instrument, a BioRobot is a closed,solution-specific instrument
• QIAGEN BioRobots are very focused on specific applications:separation, purification and handling nucleic acids
• QIAGEN BioRobots and QIAGEN consumablesare an inseparable unit
• QIAGEN BioRobots are essential for QIAGEN‘s strategy and allowQIAGEN to address some of the most exciting markets
• QIAGEN BioRobots show exciting growth rate with 34% Q4 over Q3
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29-Jan-03
BioRobot Productline
BR M48 - M96BR 3000
$40,000-80,000
BR 8000 and UHT systems$70,000 and up
EasyOne
$28,000
# of samples 1 6 48 96 (>20,000)
ConsumablesConsumables
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29-Jan-03
Easy 1 Integrated Preanalytical Solution
DetectionAssayPurification
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29-Jan-03
BioRobot MDx
Purification
DetectionAssayCollectionStabilization
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29-Jan-03
QIAGEN‘s product breakdown - worldwide
Consumables- robust growth- positive trends
Instruments- exceeded Q4 targets - 34% growth Q4/Q3
Synthetic Nucleic Acids- flat revenues- contribute loss- Synthetic RNA attractive
72%
13%11%4%Others
(2002)
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29-Jan-03
QIAGEN Consumable Business:Continuous Strong Growth
Others
50
100
150
200
250
300
350
Worl
d-W
ide
Sale
sU
S$m
illio
n
+22%Consumables
Synthetic DNA
Instruments
Consumables
ConsumablesConsumables
0
2001 2002
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29-Jan-03
QIAGEN Consumable Business:Continuous Strong Growth
Period
Gro
wth
vs p
rior
year
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002
ConsumablesInstrumentsSynthetic NA
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29-Jan-03
Forward Looking Statements
2001 2002
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0% 20% 40% 60% 80% 100%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0% 20% 40% 60% 80% 100%
Gro
wth
in % Total Sales in % Total Sales
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29-Jan-03
Employees December 31, 2002
US/ Total TotalCan Ger UK F Nor CH Aus JP NL Italy 2002 2001 Growth
305 49 28 526 410ProductionR&DSalesMarketingAdmin
14321
110321
28%-15%219 29 279 328
12 7 484 4442115792
13448
105
3744
2315
184
12
3969
9%-11%
1%1 123 138
4 4 3 239 237
Total 524 811 45 29 17 112 16 82 4 11 1651 1557 6%
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29-Jan-03
International Presence
L.A.
CanUK
DFCH
Aus
JMaryland
SFONL
I
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29-Jan-03
Rapid Change of Market Dynamics
2001 Discovery Genomics 2002 Functional Genomics
2086
_PC
R
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29-Jan-03
Rapid Change of Market Dynamics
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29-Jan-03
Entering the Next Stage: Functional Analysis
Discovery Genomics“Find the Gene”
Functional Genomics“Understand the Function”2001 Future 2002
pDNAfrom
Bacteria
Microarray (AFFX +33%)QPCR (ABI +21%)
GenotypingClinical
SamplePreparation$ 3.50
PCR
$ 2.00
CollectionStabilization$ 3.00
SamplePreparation
++ Sequencing +
$ 0.30 $ 8.50
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29-Jan-03
Market Opportunities for QIAGEN
Microarray (AFFX +33%)QPCR (ABI +21%)
GenotypingClinical
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29-Jan-03
Market Opportunities for QIAGEN
Molecular Diagnostics
Research Market
GeneTherapy
Genomics & Drug
Development
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29-Jan-03
Research
The Present: Research Market
• DNA & RNA purification kitsTransfection reagentsPCR reagents & kitsBioRobot 3000/8000/9600 & consumables
• Academic research labsBiotechnology companiesPharmaceutical companiesDiagnostic laboratories
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31
29-Jan-03
Worldwide Life ScienceResearch Budgets
Research
Worldwide Research budget : approx. US$ 100bn
50%
15%
35%
Big Pharma
Academia
Biotech
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29-Jan-03
Research Budget per Customer Segment
0
10
20
30
40
50
60
70
80
Academia Pharma Biotechnology
US$
bill
ion
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29-Jan-03
Money flows …
Academic Markets (>50% of QIAGEN’s customer base)• QIAGEN further increased market and technology leadership
• shift from sequencing to functional genomics and proteomics
• increased variety of samples and more complex and sensitive detection and analysis technologies demand highly reproducible and integratedpurification solutions
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29-Jan-03
NIH Budget
Risk is NOT a changing growth rate
• NIH focus on specific R&D areas which turn into QIAGEN‘s direction- systems biology- quantitative anaylsis of dynamic genome-wide expression patterns- analysis of complex molecular networks and their regulations- development of advanced research technologies- molecular libraries such as an RNAi library- understanding of specific diseases like Alzheimer, infectious diseasesat the level of genes, proteins and dynamic systems and
- improve the national clinical research infrastructure(eradication of inefficciencies in clinical trials system)
Risk is the NIH Grants Policy in times BEFORE offical approval
• most grants currently being awarded as „Noncompeting Continuation Awards“
- project specific period system of funding- only 70% of prior year budget available in cases of budget delays
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29-Jan-03
Trends to watch in U.S. Research Grants
NIH Budget focussing on specific disease areas- Cancer Research- AIDS vaccines- Infectious Diseases- Vaccine development- Women‘s Health- Diabetes- Anthrax ResearchIncreased military spending- DARPA grants- Focussing on BiowarfareBioterrorism- Large budget increase for homeland security- Public health infrastructure, research
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29-Jan-03
NIH Budget Allocation –Shift in LifeScience Research by Focussing on Specific Areas
Diabetes
InfectiousDiseases
Oncology
FunctionalGenomics
CNS
DrugDiscovery
NCE
Sequencing
Bioterrorism
Bud
get
in U
S$
DrugDiscovery
InfectiousDiseases
FunctionalGenomics
DiabetesCNS
Oncology
NCE
Sequencing
$
$
$
$$
$
$Bioterrorism
2002 2003
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29-Jan-03
Money flows …Customers in Big Pharma (35% of QIAGEN’s customer base)
• QIAGEN further increased market and technology leadership
• Analysts’ estimates on 2003 R&D budget growth: 8%
• shift from sequencing to functional genomics and proteomics
• increased variety of samples and more complex and sensitive detection and analysis technologies demand highly reproducible and integratedpurification solutions
• attach importance to reliability, reproducibility and ease of use of productsto avoid artefacts augmented use of established brands
0
10
20
30
40
50
60
70
80
Academia Pharma Biotechnology
US$
bill
ion
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29-Jan-03
R&D Spending in U.S. PharmaR&
Dsp
end
ing
inb
illio
nU
S$ Gro
wth
in R
&D
spen
din
gin
%
0
5
10
15
20
25
1999 2000 2001 2002 2003 2004 20050
1
2
3
4
5
6
7
8
9
10R&D $R&D Growth
Source: DB Securities Inc., 2002
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29-Jan-03
Money flows …
Biotech Markets (15% of QIAGEN’s customer base)
• 2003 estimated R&D budget growth of the Top 20 Biotech Companies: 16%
• shift from sequencing to functional genomics and proteomics
• increased variety of samples and more complex and sensitive detection and analysis technologies demand highly reproducible and integratedpurification solutions
• attach importance to reliability, reproducibility and ease of use of productsto avoid artefacts augmented use of established brands
Top 10 Biotechnology Companiesrepresent approximately 45% of totalBiotech R&D Budget
0
10
20
30
40
50
60
70
80
Academia Pharma Biotechnology
US$
bill
ion
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29-Jan-03
R&D Spending in Top 20 U.S. Biotech
CAGR 17.5
R&
Dsp
end
ing
inb
illio
nU
S$ Gro
wth
in R
&D
Spen
din
gin
%
0
1
2
3
4
5
6
7
1996 1997 1998 1999 2000 2001 2002 20030
5
10
15
20
25
30
35
40R&D $R&D Growth
Source: DB Securities Inc., 2002
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29-Jan-03
QIAGEN reduces Costs
Labor
QIAGENproducts
Labor
Off-the-ShelfChemicals
Traditionalmethods
QIAGEN solutions
QIAGEN Technologies providecost reduction through:
• reduction of labor time• reduction of mistake costs
• standardised procedures• technology advantage
• ease of use
• highest efficiency with aportfolio addressing more than80 different applications
• automation solutions
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29-Jan-03
QIAGEN Opportunities in thePurification Market
time
assumed CAGRof overall market 10-15%
Assumed CAGR 15-25%
QIAGEN Share20%
Rapid growth expected for many years to comedue to substitution of a very large„Traditional Methods“ share
Traditional Methods
Research
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29-Jan-03
Market Opportunities for QIAGEN
Molecular Diagnostics
Research Market
GeneTherapy
Genomics & Drug
Development
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29-Jan-03
MolecularDiagnostics
The Future: Molecular Diagnostics
• Human infectious diseases
• Forensic and Identity
• Genetic disease and markers
• Oncology
• Food & environment testing
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29-Jan-03
a Leading Supplier to Molecular Diagnostics
• Clinical Laboratories
• Blood Banks
• Paternity testing services
• Clinical Research Laboratories
• Forensic and Identity
Laboratories
• Food & environment testing
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29-Jan-03
MolecularDiagnostics
Molecular Diagnostics
BiochemicalBiochemicalApplicationApplication
DetectionDetectionAnalysisAnalysis
DNA/RNADNA/RNApreparationpreparation
SampleSampleCollectionCollection
BiologicalBiologicalsamplesample
Direct Sales
Integrated with Analytical Platforms
PreAnalytiX
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29-Jan-03
Partnership between ROCHE Diagnostics and QIAGEN
BiologicalBiologicalsamplesample
TaqPrepTaqPrepDNA/RNADNA/RNApreparationpreparation
DetectionDetectionAnalysisAnalysis
TaqManTaqManPCRPCR
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29-Jan-03
QIAGENTargeting Laser Microdissection (LMD)
ClinicalDiagnostics
Development and co-Marketing agreement to give Leica LMD customers access to optimized DNA and RNA purification products for use with Leica‘s systems for LMD
Emerging and fast-growing markets for LMD include:
- Functional Genomics- Target Validation- Oncology Research- Molecular Diagnostics
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29-Jan-03
MolecularDiagnostics
The PreAnalytiX Concept
ggD
NA
DN
A
Oncology, Predisposition Oncology, Predisposition
Infection (HIV, HCV, Bacterial etcInfection (HIV, HCV, Bacterial etc.PrePre--natal, Others natal, Others
AssaysAssays//ApplicationApplication
tt RN
ARN
A
pD
NA
pD
NA
Vir
al R
NA
Vir
al R
NA
mRN
Am
RN
A
mt
mt D
NA
DN
A
Oth
ers
Oth
ers
Gene/Protein ExpressionGene/Protein Expression ProfilingProfiling
ForensicForensic,, IdentificationIdentification
Nucleic Acids/Genetic Information FormatNucleic Acids/Genetic Information Format
BacteriaBacteria
Tissue Tissue
BloodBlood
othersothers
PlasmaPlasma
VirusesViruses
Biolo
gic
al
Biolo
gic
al
sam
ple
ssa
mp
les
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29-Jan-03
MolecularDiagnostics
Stabilization
DNA/RNADNA/RNApreparationpreparation
SampleSampleCollectionCollection
BiologicalBiologicalsamplesample
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29-Jan-03
MolecularDiagnosticsPreAnalytiX’s Objective
Gold Standard for any Analytical Platform
DNAand/orRNA
PreAnalytiX
Sample Nucleic Acid Collection & Stabilization & Lysis
Nucleic Acid Isolation/Purification
PCR LCR TMAbDNA NASBA SDABiochip Southern
ClinicalLaboratoryDoctors Office
AnalyticalPlatform
Roche/BM ABBOTTOrganon ChironBayer Gen-ProbeBDGene etc.
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29-Jan-03
MolecularDiagnostics
PreAnalytiX
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29-Jan-03
Market Opportunities for QIAGEN
Molecular Diagnostics
Research Market
GeneTherapy
Genomics & Drug
Development
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29-Jan-03
GeneTherapyGene Therapy Products & Services
• Industrial-Scale Products
•Other Services
•pAlliance: Valentis/DSM
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29-Jan-03
QIAGEN’s CustomersAcademic and Industrial Academic and Industrial
Research MarketResearch Market
GenomicsGenomics & Drug & Drug Development
Molecular Molecular DiagnosticsDevelopment Diagnostics
Gene TherapyGene Therapy
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29-Jan-03
Geographic distribution of revenue growth 2001 to 2002
North America
10% Growth
EuropeAsiaOther
18 % Growth
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29-Jan-03
Geographic distribution of net sales
(2002)
North America54%
Distributors + RoW 6%
Japan 12%
Europe 28%
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29-Jan-03
QIAGEN Full Year 20022002 2001 Growth
Revenues ($ million) 298.6 263.8 13%Operating Income ($ million) 43.2 53.5 -19%
adjusted 56.8* 54.4† 4%Net Income ($ million) 23.1 34.4 -33%
adjusted 33.3* 33.9†† -2%*
EPS $ 0.16 / 0.23* $ 0.24 / 0.23††
unchanged*WA Number of Shares 145.9 145.1
Employees (approx.) 1,651 1,557 6%Cash, Marketable Securities($ million) 56.4 79.0
* excluding one-time charges related to the acquisitions of GenoVision AS as well as a chargerelated to the closing of QIAGEN Genomics, Inc.
† one-time charges related to the acquisition of the Sawady Group and†† excluding a gain on the sale of a financial asset
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29-Jan-03
Currency Effects on Revenues and Expenses
0%
20%
40%
60%
80%
100%
Revenues COGS
JPY
EUR + GBPUSD + CAD
Other
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29-Jan-03
Operating Margin improvement over next Quarters
0
20
40
60
80
100
120
140
Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 20030%
5%
10%
15%
20%
25% Fixed CostRevenuesOperating Margin
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29-Jan-03
QIAGEN Guidance on 2003
Q1 2003 FY 2003
Revenues comparable to Q4 growth comparableto 2002
Operating Margin ~ 20% > 20%
Above guidance for 2003 is comparable to previous guidance.Above guidance does not reflect any improvement of markets compared to 2002 despite signs of this happening.
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29-Jan-03
New production and office site in Hilden, Germany
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