Bioprocess spurs growth for Sartorius amid hopes of normalization

Sartorius Stedim Biotech reported sales of €1.6 billion ($1.7 billion) in the first half 2024, down 3.2% on the same period last year. Order intake, meanwhile, increased by 7.5% year-on-year, driven by its bioprocess solutions business.

During its financial call, Sartorius chairman, Joachim Kreuzburg reassured investors of “healthy and encouraging product pipelines across the board” with a “very positive” mid- to long-term impact on the industry, while he spoke of “unprecedented volatilities” and “very low visibility” owing to the pandemic.

“Customers [keep] changing their outlooks. [...] That's a challenge. Therefore, we would say that the post-pandemic normalization is not yet completed. We still see volatility, and the rundown of inventory levels still affects that stem from the high times of the pandemic.”

“We still have been in negative territory for Q1, so Q2 has shown quite a better picture here. However, it's still affected in some areas by destocking effects, and we clearly see muted investment appetite by customers regarding equipment,” Kreuzberg said.

Since the pandemic, the bioprocess industry has struggled with several issues including a dwindling demand, dried up funds and an oxidizing supply chain. The slowdown has been exacerbated due to macroeconomic factors, including political tensions with China.

Despite optimistic forecasts on ‘normalization’ by major industry players including Thermo Fisher, Danaher and Sartorius signs of market recovery have yet to appear on their balance sheets.

Moreover, for the first half, Sartorius’s laboratory products and services business has reportedly taken a hit due to lack of investments and a “flat” China market.

The firm’s head of bioprocess solutions division Rene Faber said, “Two customers are protecting cash, postponing investments in equipment, and further decreasing the target inventory levels, and the visibility continues to be low.”

The China effect?

Meanwhile, talking about China, Kreuzberg said, “For our lab products and services division, sales are still below previous year, which reflects the overall soft-end markets. And clearly China, which plays a more significant role for lab products and services division [...], does play a particular role here.”

Sartorius’ regional sales performance in Asia has gone down by 4.7% year-on-year to €387 million in 2024.

“The Asian development is strongly influenced by the still-soft Chinese market, and if you take China out of the Asia figure, Asia would be growing by about three percentage points in constant currencies,” said Florian Funck, CFO, Sartorius.

Reiterating a wait and watch policy on the China Stimulus Package, Faber asked, “How far will the stimulus program by the Chinese government play a role? We think it's obviously too early to call it any stable trend, anything one could really build on, anything one could extrapolate. So, currently it's flat, but going forward we would expect clearly some recovery. It's definitely anything but a mature market.”