Danaher: Integrating Cytiva in the time of coronavirus

Cytiva, the former GE Healthcare Life Sciences business, is “off to a blistering start” at Danaher, according to an analyst despite face-to-face restrictions imposed by COVID-19.

For the second quarter 2020, Danaher Corporation reported revenues of $5.3 billon, up 19% year-on-year. This was attributed to high sales across its life sciences services divisions, including a boost from Cytiva – previously known as the Biopharma Business of GE Life Sciences – which Danaher acquired for $21 billion and became part of the business on April 1.

“Life Sciences core revenue was up 8% led by high-teens or better core growth at Cytiva, Pall Biotech, and IDT,” Danaher CEO Tom Joyce told investors last week. “More specifically, Cytiva achieved more than 20% core revenue growth in its first full quarter as part of Danaher, exceeding our expectations.”

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Danaher, which has built its company up through heavy M&A activity, does not usually present core sales for newly acquired businesses. However, the firm made an exception due to Cytiva’s “significant size and historical core sales growth rate.”

Combined with fellow bioprocess vendor Pall, the two businesses had more than 40% growth in their order book in the quarter, Joyce added, “a strong indication of the longer-term opportunities we are seeing here.”

The results showed that Cytiva is “off to a blistering start” within Danaher, Jefferies analyst Brandon Couillard told investors. “The GE deal is already turning out to be a homerun.”

COVID-19

The integration of Cytiva came amid the global pandemic, and Joyce said Danaher was forced to be “creative” in dealing with what is normally a very hands-on activity, using virtual, electronic, and digital tools to undertake orientation and communications.

“Obviously with the restrictions on travel and being and what would normally be very much a face-to-face environment with a newly acquired business – particularly a new one – we have had to come up with new and different approaches to achieve the same objectives in… getting a business off to a great start,” he said.

“This all starts with the fact that the Cytiva business brings with it to Danaher really an exceptional team of people. We got to know them unbelievably well during diligence. Certainly, we had a whole year to regulatory approvals to get to know one another. We have gotten a sense of their command of the business, their ability to drive performance, their focus on continuous improvement, the level of humility they bring, all of which sets up for a team and a business that adapts very rapidly to a Danaher environment, because they are so culturally like us right at the outset.”

Meanwhile, like others in the life sciences space, Cytiva is seeing a positive impact from the opportunities arising from industry’s efforts to develop COVID-19 vaccines and therapies.

“As we came into this year, [Cytiva] came in with a strong order book, good backlog. And then you had the COVID impact on top of that, and so when you then kind of separate what you see there you might say the non-COVID base business growth being in the mid-teens and the COVID volume obviously takes that volume growth over 20%.”

According to the firm, Pall and Cytiva’s products and solutions are involved in every COVID-19 vaccine that is in human clinical trials, and in the majority of the more than 200 vaccine and therapeutic projects currently underway around the world.

“I think the key message there is this is a business as a base business put COVID aside for a second that is off to a phenomenal start that continues to lead in its market and is continuing to build the order book day in and day out.”

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