As a further sign of a post-COVID normalization in bioprocess demand, Danaher Corporation has reported a 20% drop in orders for Cytiva and Pall in Q3.
Danaher Corporation does not break down its financials across its various business types, but speaking on its Q3 financial call the firm said its Biotechnology Group â the recently combined bioprocess offerings of Cytiva and Pall â had a strong quarter.
Part of this is due to the continued demand for bioprocessing tools and equipment to support COVID-19 programs, but as the pandemic wanes and the need for therapies and vaccines diminishes, questions remain around future sales.
Danaher has already lowered its forecasted COVID-related bioprocessing revenue from $1 billionÂ to $800 million, but it is the reduced order intake that could be most concerning, at least without context.
âFor Q3, our orders are down over 20%,â CEO Rainer Blair told stakeholders. However, he said this was âas expectedâ as Danaher is âcoming off of order comps that are well in excess of 50% in the prior year.â
Fellow vendor Sartorius saw a similar trend, reporting a 10.3% fall in orders for the first nine months 2022 over the previous year â âto put it into context last year, at this time, we actually were reporting a 72% increase of order intake, and prior year in 2020, 37%,â the firm said last week. This was attributed to the âswift normalization of demand following two years influenced by strong special effects due to the pandemic.â
But while Blair acknowledged this too was the case for Danaher, he added order books have also been affected by reduced lead times at Cytiva and Pall, driven by capacity and productivity investments. Since September 2020, over $2 billion has been pumped into Cytiva and Pallâs global networks.
âWe’ve been able to do that because the supply chain has become more secure and that’s a pretty significant impact on the order placement cadence of our customers,â he said. âIf lead times go from 52 weeks, which has been the case in some product categories in the marketplace, to 12 weeks, customers fundamentally change their order patterns,â he said as an example.
âTo give you a sense of that, if a customer wanted to order over time four bioreactors, they would order all four bioreactors at one if there’s a 52-week lead time. But if it’s a 12-week lead time, they would order one bioreactor and then follow up with other orders in the future.â
He continued: âWhat we’re seeing right now is really the normalization of the marketplace coming from a red-hot pandemic-fueled time of constraint and long lead times for orders ramped up significantly.â