Sartorius AG Investor Relations

We focus in both divisions on the attractive biopharmaceutical market characterized by long‑term and stable growth trends.

Key Growth Drivers

• Growing world population
• Increasing incomes and better access to healthcare services in emerging economies
• Aging population and rise in age-related diseases in industrialized countries

Medical progress is also fueling growth, resulting in the ongoing development and approval of new biopharmaceuticals and in the improvement or expansion of indications for already existing active pharmaceutical ingredients. Therefore, a growing number of biotech medications are being approved for treatment of rare diseases considered incurable until now, and innovative cell and gene therapies are projected to further drive growth in the biopharma sector.

Sartorius has leading market positions in core technologies and is continuously expanding its portfolio by new, complementary technologies that help our biopharma customers develop and manufacture medications faster and more easily. Our strength in selecting suitable partners or acquisition candidates is based upon our in-depth understanding of applications. We are thoroughly familiar with our customers’ requirements and their entire value-added chains, and particularly understand the interactivity of the systems they use. Our innovation strategy is based on three pillars:

• Integration of innovations through acquisitions
• Alliances with partners
• Own product development

Due to exceptionally strong organic growth, Sartorius invested considerably in building up production capacities in the reporting year. Capital expenditures totaled approximately €523 million in 2022 and were used to expand sites in Germany, France, Puerto Rico, the USA, South Korea, and China, among other countries.

North America and Asia are the key focal areas of the regional growth strategy. The USA is the world's largest market for bioprocess equipment and laboratory products. Yet because it is home to the main competitors for both company divisions, Sartorius formerly had lower market share in this region than in Europe and Asia. By systematically strengthening its sales and service capacities, Sartorius has gained market share in the USA in recent years.

In Asia, one focus is on expanding production capacity in China, particularly for the Chinese market, which offers significant growth potential due to rising private and government health care spending and the rapid establishment of regional biopharmaceutical plants. In South Korea, which offers excellent growth prospects with its dynamically expanding biopharma market, Sartorius started initial work to build a new production facility at the beginning of 2023.

The bioprocess technology market is characterized by relatively high entry barriers arising in part from the biopharmaceutical industry’s strong degree of regulation and its technological complexity.

Recurring business with sterile single-use products accounts for over seventy percent of the Group´s sales revenue. These offer customers cost advantages, flexibility, and less resource usage, and thus a better ecological footprint compared with conventional processes employing reusable stainless-steel components.

The high share of recurring revenues is also bolstered by the strict regulatory requirements on the part of the customers. Because health authorities validate production processes as an integral part of an application for approval of a new medical drug, the components initially validated can be replaced only at considerable expense once they have been approved.

Beyond this, the company’s broad and stable customer base that is primarily addressed directly through a specialized sales force also contributes to this favorable risk profile.

Acquisitions that are complementary to or extend the company’s strengths appropriately have been and will remain part of the portfolio strategy for both divisions. Due to high innovation dynamics, the company considers further additions to be possible on an ongoing basis across the entire breadth of the product portfolio.

Acquisition Criteria

• Complementarity of technologies to our existing portfolio
• Strong market positioning, for example, through innovative products with unique selling propositions
• Integration capability
• Appropriate valuation
• Growth and profitability profile

For many years, we have firmly embedded sustainability at many levels in our business. To us, it means operating responsibly and nurturing long term relationships – with respect to customers, employees, investors, business partners and society as a whole.

Company management confirms its 2023 sales revenue and profitability outlook, which was adapted in June 2023. Accordingly, Group sales revenue is expected to decline in the low to mid-teens percentage range in the full year; excluding Covid-19-related business, revenue would decline in the mid to high single-digit percent range. Acquisitions, including Polyplus, are expected to contribute around 2 percentage points to the sales revenue development (excluding Polyplus 1 percentage point). The underlying EBITDA margin is anticipated at around 30 percent (previous year: 33.8 percent). 

For its Bioprocess Solutions division, the company anticipates a decline in sales revenue in the low to mid-teens percentage range and excluding Covid-19-related business in the high single-digit to low teens percentage range. Acquisitions, including Polyplus, are expected to contribute around 2 percentage points to the sales revenue development (excluding Polyplus 1 percentage point). The underlying EBITDA margin is planned to be around 31 percent (previous year: 35.7 percent), whereby the positive margin effect from the Polyplus acquisition is not expected to have any significant impact due to its inclusion during the year.

For the Lab Products & Services division, Sartorius anticipates a low single-digit percentage decline to stable development for sales revenue; excluding Covid-19-related business, a range from a low single-digit percentage decline in sales revenue to a low single-digit growth in sales revenue is expected. The underlying EBITDA margin should be around 26 percent (previous year: 26.2 percent). 

The CAPEX ratio in 2023 is projected at around 15 percent and the ratio of net debt to underlying EBITDA at slightly above 4. While the Polyplus acquisition has been included in this outlook, possible future acquisitions are not.

All forecasts are based on constant currencies, as in the past years. Management also points out that the dynamics and volatilities in the industry have increased significantly in recent years. In addition, uncertainties due to the changed geopolitical situation, such as the emerging decoupling tendencies of various countries, are playing an increasing role. This results in higher uncertainty when forecasting business figures.
 

Sartorius views the current demand normalization after the pandemic as a phase that only temporarily overshadows the highly positive growth drivers of the life science and biopharma markets. Accordingly, the company does not change its medium-term targets until 2025.

Sartorius expects sales revenue of around 5.5 billion euros in 2025. Sartorius plans to achieve this sales revenue increase primarily through organic growth and additionally by acquisitions. For the Bioprocess Solutions division, the company projects sales revenue of around 4.2 billion euros in 2025 and for Lab Products & Services of around 1.3 billion euros.

The forecast for the Group’s underlying EBITDA margin in 2025 is around 34 percent. For the Bioprocess Solutions division, the company expects an underlying EBITDA margin of around 36 percent in 2025. The margin forecast for Lab Products & Services is around 28 percent. The margin targets include expenses of around 1 percent of Group sales revenue for measures to reduce the company’s CO₂ emission intensity.

Management points out that the dynamics and volatilities in the industry have increased significantly in recent years. In addition, uncertainties due to the changed geopolitical situation, such as the emerging decoupling tendencies of various countries, are playing an increasing role. This results in increased uncertainty when forecasting business figures.

All forecast figures are based on constant currencies

Sartorius is a globally operating company with subsidiaries in more than 30 countries. The holding company Sartorius AG is the parent company of the Sartorius Group. The corporation is headquartered in Göttingen, Germany, and listed on the German Stock Exchange with preference and ordinary shares.

Sartorius manages its bioprocess business as a legally independent subgroup whose parent corporation is Sartorius Stedim Biotech S.A., which is listed on Euronext Paris. As of December 31, 2022, Sartorius AG held around 74% of the shares of Sartorius Stedim Biotech S.A. The Group’s lab business is legally combined in a further subgroup whose parent company is Sartorius Lab Holding GmbH, in which Sartorius AG holds a 100% stake.