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Chairman's Message

Dear Shareholders and
Business Partners,

We have been experiencing an extraordinarily dynamic phase of development in life sciences, accompanied by exciting future prospects. Over the last two decades, biopharmaceutical drugs, particularly monoclonal antibodies, have rapidly evolved from medical novelties into widely established, reliable therapeutics. Still many serious diseases, such as cancer, rheumatism and Alzheimer’s, cannot be cured or can be treated only to a limited extent. Yet medical knowledge continues to expand rapidly through the increasingly globalized scientific effort, and recent breakthroughs in gene and cell therapy promise further progress.

With innovative tools and technologies that cover key steps in medical drug production, Sartorius Stedim Biotech enables the biopharmaceutical industry to achieve relevant results faster, simplifying manufacturing and increasing its overall safety. In this way, we help to ensure that new scientific discoveries can be translated more quickly into effective patient care and that more people have access to better medicines.

This approach has also made us successful in 2019. Sartorius Stedim Biotech continued its dynamic development, closing the year with double-digit growth rates in both sales revenue and earnings. Due to strong demand across all product categories and geographies already at mid-year, we significantly raised our forecast after the first half of 2019. We even exceeded this forecast, with sales growth of 17.0% in constant currencies to around €1.44 billion, and an increase in profit margin by 1.1 percentage points to 29.3%. Mainly driven by economies of scale, operating profit rose by 23.1% to €421.5 million; order intake was up 16.2%. We are also pleased to report that we were again able to increase the number of employees significantly, to slightly over 6,200.

Regionally, Asia | Pacific led growth, reporting a strong gain of 23.9% in sales revenue to €353.8 million. This underscores the enormous growth potential of this region, where many previously underserved patients are now beginning to obtain access to state-of-the-art medical drugs. Especially China performed very strongly again. Sales revenue in the Americas grew yet again by double digits, up 17.1% to €511.6 million.

The EMEA region recorded a gain in sales revenue of 13.0% to €575.1 million, which is strong performance given the more mature markets and our already relatively high market share.

At the same time, we have strengthened and extended our position as a leading international technology partner for the biopharmaceutical industry. After expanding our production capacities, we are well prepared to fully meet the increasing demand of a rapidly growing market in the future.

Our considerably extended production lines for singleuse bags and filters that went into operation in the last summer at our site in Yauco, Puerto Rico, give Sartorius Stedim Biotech the scope to supply customers in the Americas with an even broader product range directly from the region.

Moreover, we opened a new cleanroom for single-use bag manufacture at our headquarters in Aubagne, France. We geared up for further growth by establishing additional membrane casting capacity in Göttingen, Germany, and by opening a newly built, expanded facility for cell line development in Ulm, Germany.

Through the acquisition of a majority stake in the Israeli cell culture media developer and manufacturer Biological Industries, Sartorius is now operating its first own production facility for cell culture media and has significantly expanded its range of cell culture media. Next steps of the integration of this business into our Group will include building up further development and manufacturing capacities for such media.

As part of the broader transaction between Danaher and the Sartorius Group, we also signed an agreement in October 2019 to acquire parts of Danaher's life science portfolio. The portfolio offered for acquisition is an excellent strategic fit with the existing Sartorius Stedim Biotech offering, which would be significantly expanded in the area of downstream processing. The planned transaction is currently in the antitrust clearance process within the context of Danaher's acquisition of GE's Biopharma business. We expect this acquisition to be completed around the end of the first quarter of 2020.

The positive business development of our Group also resulted in a further rise in the price of Sartorius Stedim Biotech shares. Particularly in the first half of the year, the company's stock saw significant gains, reaching an all-time high of €149.20 on July 23, 2019. Shares closed the 2019 stock-market year at €147.70, up 69.1% year over year, strongly outperforming the relevant indices such as the CAC 40, SBF 120 and NASDAQ Biotechnology.

As in the past years, we plan to let our shareholders participate appropriately in the positive financial performance of the company: the Board of Directors will submit a proposal to the Annual General Shareholders’ Meeting to raise dividends to €0.68 per share.

The future outlook for Sartorius Stedim Biotech continues to be very promising. We assume that the demand for biopharmaceutically manufactured drugs will continue to rise and so will the need for highperformance technologies and solutions for the production of biopharmaceuticals. According to our medium-term targets, we will increase our revenue between 2020 and 2025 to approximately €2.8 billion, with an earnings margin of around 30%. The Asian market, primarily China, will play an increasingly important role in the achievement of these targets.

For 2020, we expect further profitable growth as well. Sales revenue is expected to increase by about 11% to 14% in constant currencies. The underlying EBITDA margin remains projected to rise to approximately 29.5%. The company's capex ratio is set to further decrease to around 8%. The acquisition of parts of Danaher's life science portfolio is not yet included in the above figures. After the closing of this transaction, we will modify our guidance for 2020 accordingly.

The most important building block for the past and future success of Sartorius Stedim Biotech is our team. More than 6,200 staff members, including 566 new employees added worldwide in 2019, are dedicating their expertise and efforts to drive the progress of Sartorius Stedim Biotech. On behalf of the entire Board of Directors, I would like to express my sincere thanks for their willingness to always go the extra mile.

I would also like to thank you, our valued customers, business partners, and shareholders. Based on the trust you have placed in us throughout the year, you have contributed importantly to the positive development of Sartorius Stedim Biotech. We would be pleased if you would continue to accompany us in 2020 and beyond, and share the future success of our company.



Joachim Kreuzburg
Chairman of the Board and CEO