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Nexcelom: Unlocking Opportunity Through Acquisition

March 2015

Since its founding in 2003, Nexcelom Bioscience, in Lawrence, has found steady growth in a unique niche: creating products that automate cell analysis. The overall objective of the company founded by Dr. Jean Qiu is to help scientists understand the causes of disease and to discover new drugs and therapies to treat them.

Qiu’s husband, Peter Li, joined the company in 2006 as CEO and president. Together, they’ve built Nexcelom into a global player through the development of the Cellometer (a plastic, disposable hemacytometer [cell counter]), which eliminated the need to wash and reassemble the instrument between each cell counting, saving precious lab time, and a range of related tools.

Following its launch, Nexcelom quickly found a following in the biology research community. “Over time, our product applications have expanded to include cancer and stem cell research, vaccine development, immunology, drug discovery and development, food and beverage quality control, and biofuels research,” says Li.

Today, thousands of scientists use Nexcelom’s products every day, and its tools can be found in university research laboratories, such as Harvard, MIT, and UMass; in the laboratories of the National Institutes of Health; in hospitals, such as MGH, Brigham and Women’s, and Dana-Farber Cancer Institute; and research institutes, including MD Anderson and Memorial Sloan-Kettering cancer research centers; and others in the cell therapy industry. They also can be found in top pharmaceutical and biotech companies, like Pfizer, AstraZeneca, Genzyme, and Amgen.

Taking the next step

While growing organically—and doing so with good success—Li wanted to find a way to increase Nexcelom’s scale and footprint more rapidly. He determined that the company needed to find a competitor with a ready-made revenue stream; a similar customer base; operations that could be, if not easily integrated, a good fit with the current model; and provide a springboard for growth. After searching for the right opportunity for about a year, Li settled on the U.K.-based Celigo S Cell [Imaging] Cytometer. Celigo provides an instrument designed to provide high-throughput screening and cell cytometry for labs—it’s a related product line at a higher price point. The acquisition was completed in March 2014.

“Celigo is a truly complementary research tool,” notes Li. “While similar in nature, Celigo allows for much higher throughput of data. In that respect, it’s a natural extension of our customers’ workflow.” Celigo offers capabilities to similar biology research clients as the traditional Cellometer products from Nexcelom, which made for a natural marketing and sales funnel.

Product integration may have been a clear fit from the start, but the immediate challenge for Nexcelom was bolstering and building on an infrastructure and distribution network that had been geared to lower-priced research tools. “First, we moved manufacturing from San Diego to Lawrence, which helped us gain a better understanding of the process,” Li says. “That was the easy part. What’s taken longer—the better part of a year—has been refocusing the team, the technology, and the product platform to get in line with the client community. Our product line has changed, so we needed to create a truly coherent message.”

Beyond messaging, Nexcelom needed to create a structure that helped put the product line in front of potential clients. To that end, in just about a year, the company has established a lab in San Diego for R&D and product demos; a sales and support arm in Manchester, England; and a subsidiary in Shanghai, China, that allows the company to directly provide service to distributor partners and end-users in the country. “We’ve seen a lot of demand in China, in particular. Our goal is to begin to build a stronger presence with distributors and customers in the European Union and Asia, overall,” adds Li.

Thus far, the acquisition and the moves Nexcelom has made to support it appear to be paying off. Since the Celigo acquisition, year-over-year sales growth has been about 30 percent, and Li estimates that about half that revenue has come from Celigo. The goal is to grow at about 25 percent annually going forward.

The potential is there, and Nexcelom is still working at the best ways to mine it. “There’s still a bit of a learning curve,” Li states. “The sales cycle is a bit different for higher-end equipment, so we’re still refining the ways in which we handle a sales pipeline and process that’s somewhat less predictable. We’re becoming more proactive. That said, we want to grow, but we want to make sure we’re managing that growth smartly and at the right speed.”

Salem Five Resource

The Power of a Supportive Partner

Nexcelom and Salem Five have a relationship that extends back to the bioscience firm’s inception. “Our relationship has been a good, stable one, but this was our first acquisition, so the numbers were bigger than we typically deal with,” says president and CEO Peter Li. “Salem Five helped by expanding our line of credit, which helped greatly with receivables. Just as important for us was having Gordon Massey [Salem Five senior vice president and team leader of Corporate Banking] help us through the stages of the acquisition. He was responsive and supportive through the entire process, and he continues to stay in touch to make sure things are working well. That’s a very important relationship for us.”.

Learn more about how partnering with Salem Five can help you get the funding and expert merger and acquisition guidance you need to grow.