SAFC Q1: ‘weak’ manufacturing, but investments to come

SAFC (Sigma-Aldrich Corporation) says it will invest across its life science businesses following a first quarter that saw “weak” contract manufacturing but flourishing viral and cell media sectors.

Sales from the company’s Commercial division - which includes its cell culture media, biomanufacturing and biologics safety testing businesses - were up a modest 3% from the same quarter last year, increasing from $155m (€112m) to $159m (€115m).

Compared to its steadier Research unit, the “SAFC Commercial business can be lumpy and may be affected by the timing of customers' purchases,” CEO Rakesh Sachdev told investors during a conference call yesterday.

Contract manufacturing was “weak” for this quarter in comparison with strong cell media sales, he added, but said he expected a comeback for manufacturing in the second quarter.

“In the first quarter, Life Science Products growth was led by strong sales of cell culture media. And we continue to focus on winning projects in the early development phase and support leading therapeutic drugs on the market with our biopharma offerings.”

The company plans to expand its cell media business with the opening of a Scottish facility later in 2014 for the manufacture of dry powder media, with Sachdev adding this sector was an area with “legs for growth.”

ADC plans

While the company planned to stagger its investments to avoid “put[ting in] everything all at once,” it would continue to make capital investments in areas of high growth and good margins, he said.

One area that will continue to see investment is SAFC’s contract manufacturing, particularly around its antibody drug conjugates (ADCs) capabilities which have benefited from recent investment.

“There’s been a lot of interest on the part of customers [concerning] using our capability” in this area,” he told investors.

Overall, Sachdev described business as “sticky” for customers, meaning once they enter a manufacturing partnership, they were likely to stick with it “for quite some time; so we feel pretty good that we can recover or get a return on these investments.”

Life Sciences Services

In the Life Sciences Services division, he said, biopharma was responsible for gains, as the unit “had another strong quarter of growth led by biopharma services.”

The balance sheet showed SAFC’s BioReliance department is in a strong position within the outsourced gene therapy services market, caused by healthy demand, he added.

“Our BioReliance business continues to perform well as we continue to grow our biological safety testing business. We are also seeing a resurgence of interest in gene therapy as a model for treating major catastrophic illnesses.”

BioReliance includes SAFC’s viral manufacturing business, which operates out of Carlsbad, California. Viral manufacturing has been “very strong” this quarter, said the CEO, seeing “double-digit growth.”