Sartorius takes €10m hit on media sales due to Lonza's regulatory woes

25-Jul-2017 - Last updated on 26-Jul-2017 at 10:15 GMT

SSB and Lonza teamed up on cell culture media in 2012

Supply chain issues stemming from an FDA warning letter at a facility run by its partner Lonza have dampened Sartorius Stedim Biotech’s first half 2017 results.

Sartorius Stedim Biotech (SSB) presented its first half 2017 results last week, and while the firm continued to see growth across its bioprocessing equipment and consumables business, it reported an overall slowdown on growth compared to previous years.

Sales revenue grew 7.5% year-on-year to €547m ($636m), while orders grew 4.3% to €583m across all regions. Last year the same period saw y-o-y growth rates of around 20% for both sales and orders.

But while CEO Joachim Kreuzburg told investors the mid-to-high rates were a result of market dynamics returning to normal after two years of “extraordinarily strong growth,” figures were also affected by problems at its culture media collaborator Lonza, which was hit by a US Food and Drug Administration (FDA) warning letter at its Walkersville, Maryland site earlier this year.

The facility packages a range of liquid and powder media produced by Lonza into ready-to-use sterile, single-use bioreactor bags produced by SSB under terms of a partnership forged in 2012. And according to Kreuzburg the regulatory issues limited delivery capacities for cell culture media in the Americas, driving a drop in sales of around 3% on last year.

“We have seen a top line effect of roughly €5m in Q1 and the same in Q2,” he said on a conference call, but told investors he expected the situation to normalise over the next quarter as the plant comes back online.

“Lonza has invested significantly in removing all obstacles that have played a role here and is waiting for the confirmation to be given by the FDA. We see no reason today to expect any delays in this and so far this is in line with our expectations.”

Stabilised growth

Reduced growth in its bioprocess division reflected the robustness of previous years rather than a decline in demand, Kreuzburg said.

Excluding the Lonza factor, the firm has seen an average organic sales growth in the Americas region of around 16.5% from 2014 to 2017. “As we have seen such strong growth in 2015 and 2016 it was expected that there would be a much lower organic growth in 2017.”

And a modest 2% y-o-y growth in sales across the EMEA region was also attributed to the very strong prior-year base.

However, the Asia Pacific region saw sales grow by 38% “due to couple of strong equipment orders and larger equipment projects” in the region.