Will 2024 see the inflection point for bioprocessing?

Having seen two years of unprecedented demand driven by COVID-19 related vaccines and products, bioprocessing vendors began reporting falling orders in the latter half of 2022. This destocking dynamic, spun out as a “swift normalization of demand,” saw quarterly sales drop 15-20% year-on-year among some of the big players.

While 2023 had been earmarked for turnaround, market conditions were slow to recover with customers continuing to work through inventory built up during the pandemic, while also continuing to conserve capital as a result of funding pressures. On top of this, the sector was further rocked by a weak funding environment and macro-economic factors such as inflation and political unrest.

But speaking at the JP Morgan Healthcare conference this week, two of the big vendors suggested 2024 would be a year of recovery.

Danaher Corporation, owner of Cytiva (which absorbed Pall Life Sciences in May 2023), had hoped Q4 2023 would be a turnaround point. While Danaher CEO Rainer Blair said his firm’s bioprocess business did see an increase sequentially from Q3 to Q4, he told delegates this was “not unexpected because Q3 tends to be the lowest quarter of the year in terms of its activity levels.” Furthermore, Q4’s book-to-bill perspective was similar to the third quarter.

“In the fourth quarter, we continued to have constructive dialogue with our customers, more anecdotes of customers coming back to more regular ordering patterns,” he said. However, “many of these constructive dialogues are yet to show up in data points of regular order submissions. We would say that we are not yet at the inflection point. For 2023, the bottom, sure, but we did not see an inflection point in the fourth quarter.”

He added: “We didn't achieve the original financial goals that we set out to and we'll look forward to getting back to that track record in 2024.”

Marc Casper, CEO of Thermo Fisher, which has a similarly large bioprocessing business, said the diminished growth in 2023 expected after several years of pandemic-driven extraordinary growth was worse than predicted at last year’s JPM conference.

“The year wound up turning out to be more challenging, even in the moderation of growth that we had reflected upon at that point in time,” he told his audience in San Francisco. “The pandemic unwind actually played out roughly as I think we expected and probably others expected, but the combination of a more difficult macro environment and a resulting caution in customer spend as well as a deterioration in the Chinese economy affected the results.”

He added Thermo Fisher’s bioproduction business – which includes cell culture media, single use technologies, and purification platforms – has historically grown 15% to 20% year-on-year, and such double-digit growth will return in due course.

“There’s clearly been customers, working through their inventories, etc. The lead times have returned to normal, but the future here is very bright in bioproduction,” he said. “I’m not smart enough to say which quarter where that exactly plays out, but the position we have there is very strong.”