Interim report Perbio Science AB January-September 2001

Interim report Perbio Science AB January-September 2001 Continued strong growth · Net sales up 36% to SEK 1,396 (1,029) million · Continued strong earnings growth at all divisions - Operating profit before amortisation of goodwill up 77% to SEK 260 (147) million - Profit after financial items but before amortisation of goodwill up 93% to SEK 253 (131) million - Profit after financial items up 106% to SEK 237 (115) million - Net profit up 107% to SEK 143 (69) million · Bioresearch division takes over sales of amidites (reagents for DNA synthesis) from Amersham Pharmacia Biotech · Construction of the Cell Culture division's new plant runs to schedule, with production due to start up in February 2002 · Summary Perbio Science has continued to cement its position as one of the world's leading suppliers of products for the research, development and production of biopharmaceuticals. The market outlook remains bright in all segments. All three divisions at Perbio Science are reporting significant increases in sales and earnings on the year 2000. The fine performance seen in the first two quarters continued during the third, with the group's margins up on the same period last year. The particularly high rate of growth at the Cell Culture division compared to the other two divisions during the third quarter means that the group's gross margin was slightly down on the second quarter. Sales climbed 36% to SEK 1,396 (1,029) million, with the 15% appreciation of the USD relative to the same period last year accounting for 12 percentage points of this growth. Organic growth for the group was 35%, compared with 18% for the same period last year. Profit after financial items but before amortisation of goodwill rose by 93% to SEK 253 (131) million and net profit increased by 107% to SEK 143 (69) million. The terrorist attacks in the USA on 11 September naturally affected sales in the third quarter. The negative impact on the Bioresearch division's reagent sales is estimated to be around SEK 12 million. The Cell Culture and Medical Device divisions have been affected to a lesser extent and mainly in the form of delivery delays. Sales and deliveries from the three divisions are for the most part expected to return to normal during October. The Bioresearch division has during the third quarter entered into an agreement with Amersham Pharmacia Biotech (APB) under which it has taken over sales of amidites (reagents for DNA synthesis) and a couple of manufacturing licences. This means greater development potential for the division's plant in Milwaukee. In connection with this there has been an uncertainty among amidite customers and sales from the Milwaukee plant during the third quarter were around SEK 20 million down on the second quarter in 2001. The division is working hard to regain its strong position with these customers. The Cell Culture division's sales were particularly strong during the third quarter, thanks mainly to highly successful development contracts with pharmaceutical manufacturers. The division's strong position in cell culture media and high-quality serum led to increased market share and improved margins during the period. The continued decline in the availability of high-quality serum again led to higher prices and the redistribution of sales volumes from Europe to high-price markets. Research and development expenses were higher than last year but are still lower than planned due to the restructuring of the Boston operation, which is now complete. The construction of the Cell Culture division's new plant for cell culture media and sterile liquids is running to schedule and is due to be completed in February 2002. The plant will double the division's production capacity and also serve as a demonstration facility for the new technology developed by the division whereby sterile liquids are produced entirely in single-use systems (BioProcess Containers). The divisions: January-September 2001 Bioresearch Sales increased by 22% to SEK 606 (495) million. Organic growth was 22% (15%). The third quarter featured lower rates of growth than previously but margins have continued to improve. The terrorist attacks in the USA had a negative impact on sales. In addition, the December 1998 contract with Amersham Pharmacia Biotech (APB) meant that a number of products were transferred to APB last year. The transfer of these products and the terrorist attacks reduced sales for the first nine months by 11% and around 2% respectively relative to the same period last year. Other activities grew by 35% during the period. The division has entered into an agreement with APB on taking over its sales of amidites. The previous uncertainty among amidite customers as to future deliveries has come to a solution beneficial to customers as well as to Perbio. This uncertainty has meant that sales from the Milwaukee plant in the third quarter were around SEK 20 million down on the second quarter in 2001. The EU has not yet approved the new BSE test developed by the division in conjunction with Prionics AG but this is expected to happen before the end of the year. All tests to date have gone well, revealing a higher level of precision than products already approved. Before this summer the BSE tests were predicted to generate sales of SEK 70-120 million in 2002 but the delayed approval may mean that next year's sales will be lower than previously anticipated. Cell Culture Sales rose by 49% (20%) to SEK 684 (458) million, all this growth being organic. Both sales and margins improved during the period in all three product areas: serum, cell culture media and BioProcess Containers (BPC). Prices for high-quality serum in particular have continued to climb, with the average price in the third quarter 14% up on the same period last year. This strong growth is due primarily to sales being redistributed to markets and customers where price levels are higher. The greatest volume growth is in cell culture media, where demand is rising on the strength of an increase in the production of vaccines and protein pharmaceuticals. 13 new development contracts for cell culture media were concluded with pharmaceutical manufacturers during the period. The division has continued to step up its investment in research and development in BPC and special cell culture media. The new plant for cell culture media and other sterile liquids will double production capacity and the new technology will broaden the division's applications and markets in the BPC field. The advantages of production in single-use systems over a traditional production plant are manifold and include greater safety and cost-effectiveness. The market has shown growing interest in the plant since building began in June. The plant is due to be completed in February 2002. Medical Device The division is reporting rapid growth in all its markets and all three product areas: voice prostheses/heat & moisture exchangers (HMEs), gynecology and contract production of obesity products. Sales climbed 39% to SEK 106 (76) million, including 25% organic growth. HMEs were the fastest-growing product group, having gained reimbursement status in the USA on 1 January 2001. Margins improved during the period because the division is now dealing with end-customers in the USA and the UK directly through its own sales subsidiaries. The newly developed Provox Handsfree HME was CE-marked during the period and will be launched in the fourth quarter. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/25/20011025BIT00260/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/10/25/20011025BIT00260/bit0002.pdf The full report