Business Development of Bioprocess Solutions
- Sales growth and earnings margin exceed expectations
- Market share gains in dynamic marketplace environment
- Portfolio expansion in process development due to two acquisitions
|€ in millions||2015||2014||Δ in %|
as a % of sales
1) In constant currencies
2) As of Dec. 31
Products for Biopharmaceutical Manufacture
Filters for sterilization of biopharmaceutical media
Culture media and buffers for cell cultivation
Innovative single-use filter technology for clarification
New single-use bags for cell cultivation and storage of biopharmaceuticals
Membrane adsorbers for safe, reliable and efficient purification in bioprocesses
Single-use bioreactor systems for cell cultivation processes of up to 2,000 L
For fiscal 2015, the Bioprocess Solutions Division reported above-average growth rates yet again, which were higher than projected at the beginning of the year. This development was driven by both stronger than expected growth of the biopharma market and market share gains.
Sales Revenue and Order Intake
|€ in millions||2015||2014||in %|
Sales revenue for the division rose during the same period from €615.6 million to €809.2 million, which equates to a currency-adjusted gain of 20.9% (reported +31.4%). All product segments contributed to this expansion, especially single-use technologies, such as bags and filters. BioOutsource Ltd. and Cellca GmbH acquired in the reporting year also developed very positively and contributed nearly 2 percentage points in constant currencies to the division’s sales revenue growth.
All following regional changes are in constant currencies, unless otherwise specified.
The positive development of the Bioprocess Solutions Division was fueled by all regions. The Americas and EMEA regions grew very dynamically in which the division gained market share according to our estimates. EMEA, which generated the highest sales accounting for around 43% of the division's revenue, reported a sharp increase in sales revenue of 22.6% to €349.6 million (reported +24,9% compared to €280.0 million. The Americas region, which represented around 38% of the division's sales revenue, saw a strong upsurge of 25.9% to €310.4 million (reported +48.8% compared to €208.6 million). In the Asia | Pacific region, which accounted for around 18% of total sales, we recorded double-digit gains in order volume. Sales revenue for this region rose 8.9% to €149.2 million (reported +17.5% compared to €127.0 million).
Earnings of the Bioprocess Solutions Division advanced significantly primarily due to economies of scale induced by dynamic sales revenue growth. Underlying EBITDA thus increased overproportionally by 47.3% from €145.6 million to €214.5 million. The division's respective margin rose from 23.7% to 26.5%, exceeding our initial guidance. Currency effects added around 0.5 percentage points to this margin improvement.
Bioprocess Solutions: Underlying EBITDA and EBITDA Margin
|Underlying EBITDA in € millions||214.5||145.6|
|Underlying EBITDA-Marge in %||26.5||23.7|
The division recorded extraordinary items of - €8.2 million in the reporting year relative to - €5.9 million a year ago.
Products and Sales
The product portfolio of the Bioprocess Solutions Division covers virtually all steps in biopharmaceutical production processes, from media for cell cultivation to bioreactors in various sizes for cell propagation, filters for purifying cell material, and systems for the storage and transport of intermediate and finished products. We also offer an extensive range of services to support our customers in complying with stringent regulatory process requirements, including installation, maintenance and repair as well as validation and consulting activities and contract testing.
Acquisitions Expand the Process Development Product Range
So far, the Bioprocess Solutions product portfolio was primarily focussed on large-scale biopharmaceutical production processes. However, during the reporting year we expanded our offering in the area of process development through the acquisition of the two companies BioOutsource and Cellca.
The acquisition of BioOutsource now enables Sartorius to offer a broad spectrum of analytic services. These tests are used in the development of drug candidates, for instance in the characterization of and comparisons between reference and generic products, as well as in later production processes such as the release of batches of medications. BioOutsource’s service offer is aimed especially at the strongly growing biosimilar industry.
Sartorius also strengthened its portfolio by acquiring Cellca, a company with a platform technology for biopharmaceutical companies that pursue in-house process development only partially or not at all. Its offer comprises the optimization of the expression system as well as cell line, media, and process development.
Together with our single-use products, cell culture media and small-volume bioreactors, we have now built up an attractive portfolio for process development and optimization especially for younger biopharma and biosimilar companies.
Bioprocess Portfolio Extended Further
In addition to extending the product portfolio during the reporting year through acquisitions, the division launched new generations of existing product lines as well as new single-use technologies.
In 2014 we introduced single-use fermentation bags made from a newly developed polyethylene film, and extended the application spectrum of this film to bags for storage processes during the year under review. As a result, our customers only have to obtain validation for a single film material and can thus significantly reduce their validation time and costs. In addition, the new single-use bags are preconfigured for specific process steps and can therefore be used directly upon delivery.
During the reporting year, Sartorius also introduced a new single-use-based technology for clarification that offers an alternative to the traditional preparation of cultures using centrifuges. What used to be separate process steps can now be carried out in a single step with all the advantages of a single-use system, saving both time and money.
To expand our offer of process analytical tools (PAT), we concluded a development cooperation during the reporting year with em-tec, a company that specializes in non-invasive flow measurement. Their disposable sensors are used in a variety of biopharmaceutical process steps to determine the flow and mass of cell material, and enable critical parameters to be measured in real time without direct contact with the medium. This will allow our customers to automate and optimize their processes even more strongly than before.
Sales Activities Expanded
The Bioprocess Solutions Division markets its product portfolio directly through its own field sales representatives. Sales activities for key accounts are coordinated and supported by global key account management. Moreover, sales and distribution activities in North America were stepped up during the reporting year in connection with the implementation of the 2020 strategy. We established a new applications center in Bohemia in 2015 following the opening of a new center in Shanghai the year before. These centers allow the presentation of all of the key products and complete solutions as well as demonstrations of a variety of different applications. Our customers also have the opportunity to simulate experiments or take part in training. We also formed a sales cooperation for membrane chromatography with GE Healthcare, the market leader in chromatography. We see this cooperation with GE as a good opportunity to establish our single-use solution on a broader base on the market as an attractive alternative to traditional reusable chromatography systems.
Research and Development
Our research and development activities encompass both in-house developments in our own core technologies as well as the integration of products through alliances with partners from universities and industry.
In-house research and development at Sartorius focuses in particular on the following technology areas: membranes, which are the core component of all types of filter products; various base technologies for a broad spectrum of applications in bioprocesses, such as single-use containers and sensors; and control technologies, for instance for fermentation. Moreover, we have extensive expertise in bioprocess application development.
Our research and development activities have the goal of helping our customers continually optimize their processes and steadily increase their efficiency. Thus during the reporting year, one focus of our R&D activities was the development of a fermentation system with which up to eight small-volume single use bioreactors can be operated simultaneously. This multiparallel operation will enable our customers to significantly increase their process development productivity.
In the area of depth filtration, we are working on the development of a single-use solution for the preparation of cultures with low cell density. This solution is characterized in particular by ease of use and flexible scalability.
From a regional perspective, the largest R&D site is located in Goettingen, with other key R&D activities taking place in Aubagne, Guxhagen, Bangalore and Royston. Overall, our research and development activities are becoming increasingly international.
Spending on research and development at the Bioprocess Solutions Division amounted to €39.5 million in the reporting year relative to €32.4 million a year earlier. The ratio of R&D costs to sales revenue was 4.9%, compared with 5.3% in the previous year.
Production and Supply Chain Management
The Bioprocess Solutions Division operates a well developed global production network with plants in Europe, North America and Asia. The largest production sites are located in Germany, France and Puerto Rico. Moreover, Sartorius has manufacturing operations in Switzerland, the UK, Tunisia and India.
Each of our production sites fundamentally serves as a center of competence for particular technologies. The Group’s biggest plant in Goettingen, for example, concentrates chiefly on the production of membrane filters, whereas the Aubagne and Mohamdia sites primarily manufacture single-use bags. Our plant in Yauco supplies membrane filters and single-use bags principally for the U.S. market. The Guxhagen site specializes in bioreactors and other systems for bioprocess applications. It collaborates closely with the Bangalore site, which mainly produces stainless steel units for these systems.
In response to the double-digit growth of the Bioprocess Solutions Division, Sartorius is making ongoing investments in the expansion of its production capacity as well as the optimization of its production processes. For instance, an additional casting machine for the production of filter membranes was commissioned at the Goettingen site, and in Yauco preparations were undertaken for the expansion of production. In addition, production turnaround times have been shortened at the three main bag production plants in Yauco, Aubagne and Mohamdia, and individual process steps have been decoupled. As a result, during the year under review we were able to improve delivery times for single-use bags despite very strong demand.