Sartorius’ strong Q1 shows ‘defensiveness of bioprocess industry,’ analysts

Sartorius reported pronounced year-on-year increases in sales and orders for its first quarter 2020, indicating the opportunities for bioprocessing and the resilience of biopharma amid the coronavirus pandemic.

For many businesses, the first quarter 2020 could be described as exceptional; at best subdued, but more realistically unsettling or even disastrous. Since January, the novel coronavirus (SARS-CoV-2) has led to systematic shutdowns and lockdowns, creating fiscal uncertainty and forcing many businesses to shut up shop.

But for Sartorius Stedim Biotech, the quarter was ‘exceptional’ in its most positive sense, with the life sciences vendor and service firm reporting sales of €422 million ($460 million), up 23% on the same period last year, with bioprocess solutions cited as the main driver.

Image: iStock/Julia_Sudnitskaya

For order intake, the results were even more exceptional, up 40.3% year-on-year to €535 million. This was “driven by larger equipment orders from China and by pull-forward effects due to stocking initiatives of customers in the context of the coronavirus pandemic,” according to the firm.

CEO Joachim Kreuzburg noted the robust results amid “these challenging times”. He told stakeholders in a conference call that the “impact from the pandemic crisis has been neutral on the group level,” other than the stocking initiatives by some customers and a negative impact on its Lab Products & Services from the standstill in China in Janaury and February,

“We are exempted from all our shelf in place regulations, where they are in place pretty much that leads to the situation at all of our production sites are up and running, and also our supply chains are quite robust.”

Bioprocess defensiveness and biopharma’s bouyancy

The bioprocess sector by-and-large has continually reported quarterly double-digit growth for the past few years as increasing numbers of biotherapeutics move into – and through – the clinic to commercialization, driving demand for tools, equipment and consumables.

Evercore ISI analysts Vijay Kumar and Luke Sergott cited Sartorius’ strong results as an indication of both the strength of the bioprocess space and biopharma’s buoyancy.

“In a stark contrast to most businesses that declined 30% to 50% in the last two weeks of March, Sartorius saw a significant benefit and has an improved outlook for the year. It goes to show how defensive the bioprocessing industry is right now,” they said in a note.

“Overall, due to bioprocessing strength, we expected biopharma to be more resilient than other end markets and Sartorius’ print supports this view going forward.”

‘Now is not the time to manage for a potential overcapacity issue’

Kumar and Sergott recently spoke to Udit Batra, CEO of rival bioprocess vendor MilliporeSigma, who was also bullish on the sector’s position at this time, specifically in its support of industry’s efforts to buildout COVID-19 vaccine capacity.

“Bioprocessing buildouts continue at a massive rate across the industry, where all key players are scaling to meet demand in the chance that vaccines make it through and with little regard to potential overcapacity once we are on the other side of this pandemic,” they wrote on April 14.

“Now is not the time to manage for a potential overcapacity issue – the world needs answers and tools providers are the ones providing them.”

Leave a Reply