Techne Corporation (NASDAQ: TECH) is a mid-cap company (2.02 B) with its headquarters in Minnesota. Techne and its subsidiaries develop and manufacture biotechnology products. Specifically, the company is comprised of three operating segments: Biotechnology, R&D Systems Europe, and Hematology.

Biotechnology

The Biotechnology division develops, manufactures, and sells biotech research and diagnostic products world-wide (except Europe.) This segment is currently responsible for 64.4% of Techne revenues which grew by 13% in fiscal 2008 primarily as a result of increased volume.

R&D Systems Europe

The R&D Systems Europe segment simply distributes the Biotechnology division’s products throughout Europe. This segment represents 29.4% of Techne revenues and grew by 22.6% in fiscal 2008. Whereas approximately 10% of this growth was due to the strengthening Euro, this segment’s sales growth was a solid 12.2% outside of the effect of currency fluctuations.

Hematology

The Hematology division develops and manufactures hematology (blood physiology) controls and calibrators for sale world-wide. Currently, this division only represents 6.2% of total revenues. However, like the other divisions, hematology experienced a growth of 6.1% in the fiscal year.

What drives growth at Techne?

New Product Development: Techne introduced 1,439, 1,540 and 1,390 new products in the fiscal years of 2008, 07 and 06, respectively. Releasing such a large number of products ensures a steady, cumulative revenue stream; if a few products are “duds” they are offset by the “home runs” that are also found in such a vast offering.

Product Life Cycle: On average, a product takes 4-7 years to mature and then experiences a slow growth over several decades. This creates a compounding effect where Techne not only brings in revenue from new products, but also existing products as well. Further, Techne has proven growth after the life cycles of its first products produced after its inception (1981) have expired.

Investing in What They Do Best: Year after year, Techne increases their spending on research and development, eschewing investment opportunities outside of their strategic expertise.

What Do the Numbers Say?

Summary

Techne is a proven leader in their industry. They maintain strong cash positions, hold no long term debt, and continually reinvest in research and development that will only increase their scientific knowledge and/or open new markets. The product life cycle of Techne’s products is incredible and is providing them with the opportunity to profit off of their existing products and continue to produce more and more. They’ve already proven that they can grow to stay ahead of the trailing end of the life cycles – which likens their growth to a snowball rolling downhill. Additionally, Techne offers diversity to our portfolio as we currently have no positions in the Healthcare sector.