bioMérieux - First-Half 2012 Business Review

Thu Jul 19, 2012 12:00pm EDT

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bioMérieux - First-Half 2012 Business Review

Regulatory News:

  • Sales
    • Up 8.7% at constant exchange rates
    • Of which 2.9% through organic growth
  • bioMérieux China becomes the Group's 3rd largest company, with sales up 48%*
  • Solid 22%* growth in sales of the Full Microbiology Lab Automation (FMLA®) range
  • Confirmed strong momentum in industrial applications, up 8.2%*

bioMérieux (Paris:BIM), a world leader in the field of in vitro diagnostics, today released its business review for the six months ended June 30, 2012.

Net sales for the period amounted to €750 million, up 11.4% from the €673 million reported in first-half 2011. This represented a year-on-year increase of 8.7% at constant exchange rates and of 2.9% at comparable business base.

Second-quarter sales stood at €388 million, lifted by the 20.6% organic growth delivered by the Asia-Pacific region.

Sales

by Region

In € millions

  Six Months Ended
June 30, 2012
  Six Months Ended
June 30, 2011
  % Change
As Reported
  % Change
At constant exch. rates & comparable business base
  Three Months Ended
June 30, 2012
  Three Months Ended
June 30, 2011
  % Change
As Reported
  % Change
At constant exch. rates & comparable business base
Europe(1)   395   359   +10.1%   0.0% 199.3   181.9   +9.5%   -0.1%
North America 167 155 +7.7% -0.4% 86.1 79.1 +8.9% -2.8%
Asia-Pacific 126 99 +26.9% +17.5% 69.6 52.7 +32.0% +20.6%
Latin America   62   60   +3.9%   +4.2% 32.6   32.1   +1.6%   +2.7%
TOTAL   750   673   +11.4%   +2.9% 387.6   345.8   +12.1%   +2.7%

(1) Including the Middle East and Africa

“bioMérieux’s first-half sales rose 8.7% at constant exchange rates, with 2.9% organic growth," said Jean-Luc Belingard, Chairman and Chief Executive Officer. “Sales varied by region. They were robust in emerging markets, with double-digit growth. In this challenging economic environment, our balanced geographic footprint is a real strength. In addition, the FMLA® range delivered strong growth, attesting to the effectiveness of our clinical microbiology strategy. Industrial applications, reinforced by the July 2011 acquisition of AES Laboratoire, confirmed their growth potential. In the current economic environment, our sales growth objective for 2012 remains unchanged.”

* At constant exchange rates and comparable business base

SALES

In the six months ended June 30, 2012, sales rose by 2.9% at constant exchange rates and comparable business base, and by 8.7% at constant exchange rates and after changes in the business base (primarily the acquisitions of AES Laboratoire and ARGENE in July 2011 and the divestiture of Dima Diagnostika in early 2012).

Analysis of Sales

In € millions

     

In %

 
Sales - Six Months Ended June 30, 2011   673  
Currency effect +18 +2.7%
Organic growth (at constant exchange rates and comparable business base) +19 +2.9% +8.7%
Changes in business base   +40   +5.8%
Sales - Six Months Ended June 30, 2012   750   +11.4%

With the same underlying trends observed in 2011 remaining in effect, sales continued to vary by region during the period.

  • Market conditions were difficult in Southern Europe (11%* of consolidated sales), where governments are trying to cut their public deficits, and in France (11%* of consolidated sales), where clinical laboratories are continuing to consolidate.
  • Sales in North America (22% of the consolidated total) were stable, reflecting high prior-year comparatives and low consumption of clinical application reagents.
  • Emerging markets (27% of the consolidated total) continued their upward trend, with in particular the Emerging 7** reporting organic growth of nearly 24%. The bioMérieux product offering, notably in clinical and industrial microbiology, as well as the VIDAS® range, is especially well aligned with these countries’ public health needs.
  • The other countries reported moderate sales, led, however, by strong growth in the United Kingdom.

At constant exchange rates and comparable business base, first-half 2012 sales may be analyzed by region as follows:

  • Sales in the Europe - Middle East - Africa region (53% of the consolidated total) remained steady over the period.
    • In Western Europe (45% of the consolidated total), sales varied widely by country in a weakened economy.
      • In Southern Europe (Italy, Spain, Portugal and Greece), sales decreased by 6%. The high proportion of healthcare expenditure in public deficits is forcing governments to undertake austerity measures in an effort to lower demand, reduce prices and encourage structural reforms in the healthcare sector. At the same time, bioMérieux intends to limit its exposure to default by certain public-sector customers and is deploying measures that have impacted sales.
      • In France, sales contracted by nearly 6%, impacted by laboratory consolidation. In this context, sales of routine VIDAS® tests continued to decrease. In addition, laboratories are increasingly asking to replace instrument sales by placements as part of lease or reagent / services contracts. This is enabling bioMérieux to continue to expand its installed base and secure its revenue stream over the next years. Industrial application sales were buoyed by reagents, which grew by more than 5% over the period.
      • In the other countries, growth was moderate, led, however, by strong demand in the United Kingdom. In this country, clinical applications benefited from vigorous hospital sales of microbiology instruments. In addition, the contract signed in 2011 with the National Health Service blood banks boosted sales of industrial application reagents. Operations in Germany also reported solid growth in reagent sales, in particular in clinical and industrial microbiology.
    • In Turkey, Eastern Europe, the Middle East and Africa, sales rose by a fast 11%, thanks in particular to the 2011 reorganization of operations in Russia and robust demand in Turkey.

* Excluding AES Laboratoire and ARGENE
** Brazil, China, India, Indonesia, Mexico, Russia and Turkey

  • In North America (22% of the consolidated total), sales were steady, as compared with the first-half 2011 when organic growth was close to 6%.
    In the clinical field, the VIDAS® immunoassay range recorded a solid performance, driven by the success of VIDAS® B.R.A.H.M.S PCT. A recent survey* reported an increase in pediatric and other sepsis cases in ICUs and showed that 80% of doctors surveyed were aware of the benefits of testing for procalcitonin (PCT) levels in suspected sepsis patients in order to expedite treatment. Nevertheless, the performance of the clinical microbiology ranges has been impacted by the strong blood culture instrument sales in 2011, lower-than-expected reagent consumption and rising pressure on reagent prices. On the upside, the FMLA® range pursued its rapid development, and the new automated blood culture system and the incubator incorporating imaging technology were met with success at the June 2012 General Meeting of the American Society of Microbiology (ASM). Lastly, in June, the U.S. FDA authorized the sale of the new antibiotic susceptibility test Piperacilin/Tazobactam (TZP) on VITEK® 2.
    At the end of June, the Supreme Court upheld the U.S. healthcare reform. Giving more Americans access to health insurance, the law should increase business volumes for clinical laboratories. In compensation, a Medical Device Excise Tax will come into effect in January 2013, which could represent a charge of about €4 million on bioMérieux’s net income.
    In industrial applications, sales increased at a satisfactory pace, led by reagent consumption and services.
  • Sales rose by 17.5% in the Asia-Pacific region (17% of the consolidated total).
    China showed brisk growth, with sales soaring 48% to €48 million in first-half 2012, making bioMérieux China the Group’s third largest company. The environment is particularly favorable, with a major reform of the healthcare system underway and a Ministry of Health campaign launched to encourage more appropriate use of antibiotics. bioMérieux enjoys undeniable competitive strengths in China. Present for the past 20 years, it has a specialized sales network that was strengthened in 2011 to support expansion in new territories, a flexible sales organization built around local offices based near customers, and a product offering aligned with market needs. In addition, bioMérieux is establishing local production and R&D capacity. Lastly, as part of its regional expansion plan, certain corporate functions and a regional customer training center have been based at the Shanghai facility.
    Sales in India rose by 19%, driven by 26% growth in the VIDAS® immunoassay range.
    With equipment demand high in the region, instrument sales were very robust and accounted for a quarter of total sales. Sales of clinical applications rose sharply, impelled by the microbiology and VIDAS® ranges, while industrial applications turned in a brisk 22% increase.
  • In Latin America (8% of the consolidated total), sales were up 4.2% for the period, with growth limited by stable sales in Brazil after the steep growth reported in first-half 2011.
    After the robust instrument sales in 2011, growth was led by reagent sales. In clinical applications, sales of microbiology and VIDAS® immunoassay reagents were firm. Sales of industrial applications rose by more than 12%.

* http://www.biomerieux-usa.com/servlet/srt/bio/usa/home
Critical Care Doctors Report an Increase in Sepsis in the ICU, Including a Notable Increase in Pediatric Sepsis

At constant exchange rates and comparable business base, first-half 2012 sales may be analyzed by technology as follows:

Sales

by Technology

In € millions

  Six Months Ended
June 30, 2012
  Six Months Ended
June 30, 2011
  % Change
As Reported
  % Change At constant
exch. rates & comparable business base
Clinical Applications   597   568   +5.1%   +1.9%
Microbiology 379 353 +7.3% +3.5%
Immunoassays 176 175 +0.6% +0.3%
Molecular Biology 34 32 +9.1% -8.7%
Other Lines 8 8 -5.9% +3.9%
Industrial Applications   153   105   +45.3%   +8.2%
TOTAL   750   673   +11.4%   +2.9%
  • Sales of clinical applications increased by 1.9% over the period.
    • Microbiology, the Group’s core business that represents 51% of consolidated sales, advanced by 3.5%. After the strong sales reported in 2011, first-half growth reflected the robust performance of the automated ID/AST offering and progress in full lab automation solutions. To further strengthen its leadership position, bioMérieux is actively preparing the launches of its new automated blood culture system and its incubator incorporating imaging technologies.
    • Sales of immunoassay lines were stable, held back by a decrease in microplate sales in the face of very aggressive competition and in rapid tests, which are just being launched.
      The VIDAS® range, which accounts for nearly 90% of the immunoassay franchise, delivered growth of around 2%. Routine reagent sales in developed countries continued to decline due to the consolidation of clinical laboratories. However, sales did benefit from the repositioning of the VIDAS® range in high medical value tests, which account for around 35% of VIDAS® reagent sales, and in emerging markets where demand was high.
    • Molecular biology sales were down 9%, reflecting sharper competition from integrated solutions. In molecular biology, bioMérieux intends to focus its development on infectious diseases by broadening ARGENE's menu and marketing tests via the integrated Biocartis platform.
  • Industrial applications confirmed their vitality with sales up 8.2%. Growth was firm across all regions, with, in particular, sales rising 36% in the Emerging 7, whose economic growth offers a solid platform for development. Following the consolidation of AES Laboratoire, which gives bioMérieux the broadest offering in the market, industrial applications now account for 20% of Group sales.
  • Sales of reagents and services, which accounted for 88.7% of the consolidated total, were up 3.1%
    at constant exchange rates and comparable business base. Reagent prices slipped slightly, mainly due to growing pressure from government authorities on the healthcare industry in developed countries.
  • Instrument sales were stable, but varied widely by region. Organic growth was robust in the Emerging 7, creating an installed base that will drive future demand for reagents. Instrument sales represented 11.3% of total sales.

OTHER FINANCIAL HIGHLIGHTS

  • Consolidated income statement
    In line with the 2012-2015 roadmap, particular attention was paid to operating costs.
  • Consolidated balance sheet
    • The installed base at June 30, 2012 reached approximately 66,300 instruments, an increase of 1,500 new instruments over the period.
    • The dividend of €0.98 per share, approved by shareholders at the May 30, 2012 Annual Meeting, was paid on June 6th. It represented a total payout of €38.7 million.
    • Days sales outstanding remains high in Greece, whereas in Spain, most of the provinces have settled the pre-2012 invoices due from public hospitals, with bioMérieux receiving a total of €28.5 million in payments. In the same way, in the first half of July, more than €2 million in payments were received in Portugal.
    • As a result, net debt stood at around €94 million at June 30, 2012, down €37 million from December 31, 2011, attesting to the solid cash flow generated over the period.
      In April 2012, the Company rolled over its syndicated line of credit scheduled to expire in January 2013 and now has access to a five-year, €350-million revolving credit facility expiring in March 2017. This funding is subject to a sole financial ratio: net debt must not exceed three times EBITDA (leverage ratio).
  • Human resources
    The Company had 7,105 full-time-equivalent employees as of June 30, 2012. There were 7,014 full-time-equivalent employees as of December 31, 2011.

SECOND-QUARTER OPERATING HIGHLIGHTS

  • Commercial offer
    bioMérieux has launched six new products since the beginning of the year.
    The second quarter saw the introduction of the third version of the Myla® middleware, which is part of the Full Microbiology Lab Automation (FMLA®) range. Myla® helps to optimize microbiology laboratory workflows and consolidate data, converting them into quickly actionable information for treatment decisions. This third version offers important new features for clinical laboratories, especially for blood culture testing. It may also be used in industrial applications.
    Also in the industrial field, bioMérieux has introduced a specialized version of its VITEK® MS mass spectrometry solution for the identification of bacteria and yeast. Compliant with the traceability standards in Title 21 CFR Part 11 of the American Code of Federal Regulations, the solution includes a dedicated database developed by bioMérieux. It is primarily intended for large pharmaceutical laboratories.
    In clinical applications, bioMérieux pursued the process of obtaining FDA clearance to commercialize the VITEK® MS mass spectrometry solution in North America. bioMérieux will file for the corresponding 510(k) dossier before year-end.
  • Integration of AES Laboratoire and ARGENE
    The process of integrating AES Laboratoire and ARGENE proceeded on schedule.
    Integrating AES Laboratoire is a priority for 2012. The sales teams of bioMérieux and of the five AES Laboratoire companies are now fully coordinated and, in the Industry Department, a new organization is being deployed.
    ARGENE products are now being commercialized by more than 20 bioMérieux subsidiaries and have been shipped from the International Distribution Center (IDC) since June. In addition, during the second quarter, production of two ARGENE products continued to be transferred to the Grenoble site, which produced the validation batches on schedule.
  • Research and Development
    • Platforms under development
      The new generation VIDAS® instrument will be presented to clinical laboratories during the Journées Internationales de Biologie congress next November in Paris.
      In clinical microbiology, the new automated blood culture system and the incubator incorporating imaging technologies will be brought to market in 2013. This is a particularly important launch for bioMérieux. The two systems correspond to the automation needs of laboratories. They will help to optimize workflows, enabling technicians to focus on high value-added tasks, while facilitating faster, more reliable clinical decisions to improve patient care.
      In molecular biology, the company Biocartis has decided to postpone its platform’s planned CE market launch by six months until 2014, in order to ensure a broader sample type versatility and already have PMA* quality documentation at initial EU launch.
      In the field of automated point-of-care, bioMérieux and Philips continue their collaboration to create a handheld solution for hospitals. However, the two partners plan to postpone the commercial launch, privileging the achievement of high technical requirements at its initial launch date. The next technical and analytical milestone is scheduled at the end of the year.
    • Personalized medicine and theranostics
      In the coming weeks, bioMérieux intends to file for FDA Pre-Market Approval of a molecular theranostic test to detect BRAF V600 (V600E and V600K) gene mutations found in several cancers, including melanoma. Following their collaboration agreement signed in May 2010, bioMérieux has been partnering with GlaxoSmithKline (GSK) to develop the companion diagnostic, which is intended to be used as an aid in selecting patients with BRAF V600 mutation positive metastatic melanoma to assist oncologists in choosing the appropriate treatment.
      bioTheranostics announced new advances at the 2012 American Society of Clinical Oncology (ASCO) Annual Meeting in June. It presented a prospective study showing favorable overall survival of patients with cancers of unknown origin and whose oncologic treatment is driven by the results of the CancerTYPE ID® test. It also announced that it has extended its PRÉCISSM Precision Medicine biomarker profiles, used in particular to select the best therapeutic strategy.
    • Collaboration with ExonHit
      Given the results of clinical testing, bioMérieux and ExonHit have mutually agreed not to pursue their collaboration dedicated to discovering biomarkers for the detection of certain cancers.
  • Operational advances
    • End of production at the Basingstoke plant
      As part of the ongoing plan to optimize the manufacturing base, production of culture media at the Basingstoke, UK plant will be terminated in 2013. The leased facility employs eight people.
    • Deployment of the Global ERP system
      In April, the Global ERP was successfully deployed in Switzerland and Argentina. In addition, projects carried out during the second quarter also supported its early July roll-out in Austria, Hungry, Czech Republic and Chili, bringing to twelve the number of countries where the Global ERP has been implemented.

* FDA Pre-Market Approval

NEW INVESTOR CALENDAR

Due to logistical issues, the Company’s Investor Day has been rescheduled for January 23, 2013 in Marcy l’Etoile.

Dates for the other 2012 events remain unchanged:

  • First-half 2012 financial results: September 4, 2012, after close of trading
  • Third-quarter 2012 sales: October 23, 2012, after close of trading.

The above forward-looking statements are based, entirely or partially, on assessments or judgments that may change or be modified, due to uncertainties and risks related to the Company's economic, financial, regulatory and competitive environment, notably those described in
the 2011 Registration Document. Accordingly, the Company cannot give any assurance nor make any representation as to whether the objectives will be met. The Company does not undertake to update or otherwise revise any forecasts or objectives presented herein, except in compliance with the disclosure obligations applicable to companies whose shares are listed on a stock exchange.

ABOUT BIOMERIEUX

Advancing Diagnostics to Improve Public Health
A world leader in the field of in vitro diagnostics for over 45 years, bioMérieux is present in more than 150 countries through 40 subsidiaries and a large network of distributors. In 2011, revenues reached €1.427 billion with 87% of sales outside of France.
bioMérieux provides diagnostic solutions (reagents, instruments, software) which determine the source of disease and contamination to improve patient health and ensure consumer safety. Its products are used for diagnosing infectious diseases and providing high medical value results for cancer screening and monitoring and cardiovascular emergencies. They are also used for detecting microorganisms in agri-food, pharmaceutical and cosmetic products.
bioMérieux is listed on the NYSE Euronext Paris market (Symbol: BIM – ISIN: FR0010096479).
Other information can be found at www.biomerieux.com.
Information for investors can be found at www.biomerieux-finance.com.

APPENDIX: QUARTERLY SALES DATA

Sales by Region - in € millions
  First Quarter   Second Quarter   First Half
    2012   2011   2012   2011   2012   2011
Europe(1) 195.6   176.9   199.3   181.9   394.9   358.8
North America 80.9 76.0 86.1 79.1 167.0 155.1
Asia-Pacific 56.4 46.6 69.6 52.7 126.0 99.3
Latin America   29.9   28.1   32.6   32.1   62.5   60.2
TOTAL   362.8   327.6   387.6   345.8   750.4   673.4

(1) Including the Middle East and Africa

Change in Sales by Region - in %

 

  First Quarter   Second Quarter   First Half
    As Reported   At constant exch. rates & comparable business base   As Reported   At constant exch. rates & comparable business base   As Reported   At constant exch. rates & comparable business base
Europe(1) +10.6%   +0.1%   +9.5%   -0.1%   +10.1%   0.0%
North America +6.4% +2.3% +8.9% -2.8% +7.7% -0.4%
Asia-Pacific +21.1% +13.9% +32.0% +20.6% +26.9% +17.5%
Latin America   +6.4%   +5.9%   +1.6%   +2.7%   +3.9%   +4.2%
TOTAL   +10.8%   +3.1%   +12.1%   +2.7%   +11.4%   +2.9%

(1) Including the Middle East and Africa

Investor Relations
bioMérieux
Isabelle Tongio
Tel: + 33 4 78 87 22 37
investor.relations@biomerieux.com
Media Relations
bioMérieux
Koren Wolman-Tardy
Tel: + 33 4 78 87 20 08
media@biomerieux.com
ou
Image Sept
Laurence Heilbronn
Tel: + 33 1 53 70 74 64
lheilbronn@image7.fr
Albane de La Tour d'Artaise
Tel: + 33 1 53 70 74 84
adelatour@image7.fr

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