Sartorius: ‘Normalization’ continues, analysts eye 2024 for recovery

Bioprocessing continues to ‘muddle along’ through a prolonged post-COVID comedown but Sartorius should see a return to normal sales and ordering patterns in the coming quarters.

Sartorius Stedim Biotech reported sales of €1.140 billion ($1.26 billion) in the first half 2023, down 18.7% on the same period last year. Order intake, meanwhile, fell 37.5% to €1.142 billion.

The company attributed this to the continued decline in demand for bioprocess technologies and services following two years of unprecedented growth during the COVID-19 pandemic. This trend first arose in the second half of 2022 and was described at the time by Sartorius senior management as a “swift normalization of demand.”

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However, this ‘normalization’ has not proven to be quite as swift as Sartorius and the bioprocess faction have hoped.

The vendor warned of a prolonged period in June and as such lowered its 2023 forecast, dropping its EBITDA margin to around 30% from the forecasted 33.8%. the story is similar among bioprocess peers, though Sartorius is traditionally the first life sciences vendor to report its earnings.

During Sartorius’ financial call René Fáber, head of Bioprocess Solutions and CEO of the Stedim Biotech business, added more color, saying there is a similar normalization effect across all regions.

“US is impacted by destocking mainly.” Europe was similarly impacted, with the added factor of a decline in Russian business, he continued, while Asia-Pacific saw the strongest decrease due to soft China business.

“What we see in China is that the effects of inventories, build ups, over capacities, and also the challenging funding environment also apply in China, but are kind of more pronounced there compared to other regions and also the recovery might take a bit longer in China than in other regions. And we also see a stronger presence now of local competitors in China.”

Analysts were unsurprised with the dragged-out decline but remained optimistic going forward. EvercoreISI analyst Vijay Kumar described bioprocessing as “muddling along” but noted orders are expected to gradually pick up in the second half of the year.

Jefferies’ Brandon Couillard, meanwhile, estimated the bioprocess industry saw around $2 billion of excess demand during the height of COVID (FY 21/22), which flipped around to an under-demand of about $2.5 billion across the industry this year.

However, “we see a credible pathway to recovery and more normalized growth rates in 2024 for core/base business bioprocess growth,” he wrote, predicting “a resumption of more traditional ordering patterns in late 3Q / early 4Q.”