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.

Following the exceptionally strong previous years, Sartorius expects further growth in 2023 despite demand normalization and anticipated further declines in the Covid-19-related business. Consolidated sales revenue is expected to increase by an amount in the low single-digit percentage range. Excluding the Covid-19-related business, the increase would be in the high single-digit percentage range. Acquisitions are anticipated to contribute around 1 percentage point to growth. The Group’s underlying EBITDA margin should be around the level of the prior year (33.8 percent).

For the Bioprocess Solutions division, the company anticipates sales revenue growth in the low single-digit percentage range. Excluding the Covid-19-related business, the increase would be in the high single-digit percentage range. Acquisitions are expected to contribute around 1 percentage point to growth. The division’s underlying EBITDA margin is anticipated to be around the level reached in 2022 (35.7 percent).

Sales revenue growth in the Lab Products & Services division is expected to be in the mid single-digit percentage range. Excluding the Covid-19-related business, the increase would be in the high single-digit percentage range. This division’s underlying EBITDA margin is also expected to be around the level of the prior year (26.2 percent).

The company will continue its comprehensive capacity expansion program in 2023. The CAPEX ratio should be at roughly 12.5 percent and the ratio of net debt to underlying EBITDA at about 1.5. Possible acquisitions are not included in this projection.

All forecasts are based on constant currencies, as in the past years. In addition, management points out that the dynamics and volatilities in the life science and biopharma sectors have increased over the past years and the coronavirus pandemic has further amplified these trends. Moreover, the forecasts are based on the assumption of no deterioration in the geopolitical and global economic situation, supply chains, inflation and energy supply, and no new relevant restrictions in connection with the coronavirus pandemic. Accordingly, current forecasts show higher uncertainties than usual.

Based on the unchanged strong fundamental growth trends in its markets and the resulting positive prospects for the company, Sartorius confirms its fundamental growth projections. In light of increased inflation and associated price adjustments, the company therefore is making a mathematical adjustment to its medium-term sales revenue forecast and now expects sales revenue of around 5.5 billion euros in 2025 (previously around 5 billion euros). Sartorius plans to achieve this sales revenue increase primarily through organic growth and additionally by acquisitions. For the Bioprocess Solutions division, the company now projects sales revenue of around 4.2 billion euros in 2025 (previously around 3.8 billion euros) and for Lab Products & Services of around 1.3 billion euros (previously around 1.2 billion euros).

The forecast for the Group’s underlying EBITDA margin in 2025 remains unchanged at around 34 percent. For the Bioprocess Solutions division, the company continues to expect an underlying EBITDA margin of around 36 percent in 2025. The margin forecast for Lab Products & Services also remains unchanged at 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.

All forecasts are based on constant currencies, as in the past years. In addition, management points out that the dynamics and volatilities in the life science and biopharma sectors have increased over the past years and the coronavirus pandemic has further amplified these trends. Moreover, the forecasts are based on the assumption of no deterioration in the geopolitical and global economic situation, supply chains, inflation and energy supply, and no new relevant restrictions in connection with the coronavirus pandemic. Accordingly, current forecasts show higher uncertainties than usual.

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.