Sartorius Q1: CGT confidence among declining COVID sales

With ‘demand normalization’ hitting the topline, Sartorius lays out ambitions in the cell and gene therapy materials sector further propelled through the planned acquisition of Polyplus.

Life sciences service firm Sartorius presented sales of €695 million ($761 million) in its Bioprocess Solutions business for the first quarter 2023, a 14.7% drop on the same period last year. Orders, meanwhile, fell 35% to €575.7 million compared to Q1 2022.

Management explained the decline as a continuation of demand normalization following the unprecedented demand seen during the height of the COVID-19 pandemic and, according to CEO Joachim Kreuzburg, was fully expected.

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“Two-and-a-half years ago, when order intake jumped by around 50% from one quarter to the other, we said don’t extrapolate this. They are non-sustainable effects playing a role beyond the upcoming demand for corona vaccine manufacturing back then, first players started to prepare themselves for the manufacturing of corona vaccines, and we clearly always flagged that we were seeing stocking effects in the industry,” he told shareholders yesterday.

He added the firm had expected destocking, which began mid-last year. “We initially would have thought that it started a little bit earlier and would have affected a larger part of 2022. It affected pretty much the second half of ‘22, but that of course means that it’s affecting ‘23 quite a bit.

“Our expectation, and it always has been that, is this destocking would pretty much influence one year, four quarters. So therefore, this first half of 2023, we expect this impact to be significant. And therefore, when we made our guidance for the full year, 2023, I think we made it quite clear that the two halves of this year would look differently. So again, an expected reduced demand, which we consider to be temporary. And therefore we are also confirming the outlook for the year 2023.”

CGT business build-up

But amid the current decline, management described its M&A strategy to tap the growth opportunities presented by new modalities – essentially cell and gene therapies (CGTs) – and how the recently announced $2.6 billion takeover of Polyplus fits in.

“Since 2018, we have been very focused on building a portfolio of media and critical materials, critical raw materials using development and manufacturing of cell and gene therapies,” said René Fáber, the new CEO of Sartorius’s Stedim Biotech division.

“Starting in 2019 with Biological Industries and then 2021 CellGenix, we added media and growth factors, both used to make literally all types of cell therapies, cell then brought specialized media for viral vector manufacturing.”

He added the $500 million acquisition of Albumedix last summer added recombinant albumin to Sartorius’s portfolio, which is used to move to use chemically defined components in CGTs.

“And now Polyplus will complement the portfolio with transfection reagents and plasmid DNA and as you can see, making us quite relevant and attractive supplier to this attractive end market. As said, we see nice synergies across the product which bring us access to literally every customer working on cell and gene therapies in the market.”

The deal is expected to close in the third quarter 2023.