Danaher is confident it will continue to see high-single to low-double digit growth within its Pall and Cytiva bioprocess businesses, despite concerns surrounding dips in biotech funding and reduced COVID-related revenue.
For the second quarter 2022, Danaher Corporation reported revenues of $7.8 billion, up 9.5% on the same period last year.
The company does not breakdown its results by business but during a financial call last week divulged its bioprocessing division ‚Äúcontinued to see record activity levels‚ÄĚ driving a combined core revenue growth rate of high single digits.
Danaher owns Pall and Cytiva, which, along with their large bioprocess vendor peers, have been subject to robust growth for years, aided by lucrative funding in the biotech space and buoyed in the past couple of years by lucrative COVID-related business.
But with a slowdown in venture funding affecting the biotech space and a drop in demand for COVID vaccines and therapeutics, questions were asked as to how long bioprocessing would continue to ‚Äėrun hot.‚Äô
With the majority of biotechs reliant on funding being in the preclinical or very early-stages of development, Danaher CEO Rainer Blair told investors he was not worried about the apparent funding crunch.
‚ÄúOur business is driven by what’s happening in Phase III and ultimately commercialized drugs,‚ÄĚ he said, adding over 75% of Danaher‚Äôs bioprocess business is in that later stage.
‚ÄúWe really haven’t seen much of an impact of the biotech funding crunch here affecting the customer activity levels that we have. And frankly, we do look at these biotech‚Äôs and the proposals that they are pursuing whether there is proof-of-concept and data. And our sense is that the good projects, and where the data is solid and convincing, and proof-of-concept is given, they are continuing to attract funding.‚ÄĚ
Furthermore, Blair said he was confident the funding environment would always support quality programs; ‚Äúthose that are able to provide data continues to be quite positive.‚ÄĚ
He added: ‚ÄúBiotech area is a cauldron of innovation. That’s where the risks are taken. That’s where the out of the box thinking oftentimes occurs. And that’s where the Genentechs and the Amgens and others started and many more that are huge public companies today. So, we of course longer term will want to see that the funding continues to support that kind of innovation environment. But today are not concerned about what we see here for the next call it 18, 24 months.‚ÄĚ
On the COVID side, Blair admitted orders were diminishing, lowering the forecasted revenue from vaccines and therapeutics for 2022 to $1 billion, compared with the $2 billion generated in 2021.
However, he described customers as continuing ‚Äúthe healthy transition away from COVID-19 vaccines and therapies, and into previously paused and new programs for other modalities,‚ÄĚ and no need to change the high-single to low-double digit core revenue growth outlook in Danaher‚Äôs bioprocessing business.
‚ÄúThe biologics market remains very healthy as evidenced by the increasing number of treatments and development and production. Today, there are over 1,500 monoclonal antibody based-therapies in development globally, which is up more than 50% from just five years ago. This is being driven by both novel molecules and development and the proliferation of biosimilars, which are helping to accelerate adoption and underserved markets as patents on higher volume therapies expire.
‚ÄúThere are also over 2,000 cell and gene therapy candidates in development today, a more than tenfold increase over the last several years.‚ÄĚ