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Sartorius share: Skills shortage is getting worse

German companies have to fight internationally to be competitive. This is also confirmed by the exclusive study by the Boston Consulting Group (BCG) on the profitability of over 2000 companies worldwide. Only a few corporations from Germany make it among the top values ​​in their respective industries. The pharmaceutical supplier Sartorius is one of these exceptions.

Among the German companies, Sartorius took second place in the BCG ranking, behind the logistics company Hapag-Lloyd. In an international industry comparison, the Goettingen-based company took third place. Over the past five years, the Dax group has brought shareholders an average return of 36 percent per year. BCG included both the price gain and the distributed dividends. In an interview with WirtschaftsWoche, CEO Joachim Kreuzburg explains why things haven’t been running smoothly for the company, which has been used to success, on the stock exchange. He also describes how Sartorius intends to continue growing after the end of the boom caused by the corona pandemic and where efficiency gains are still possible in the production of biopharmaceuticals.

WirtschaftsWoche: Mr. Kreuzburg, your latest quarterly figures disappointed many investors. The stock fell about 10 percent. What’s behind it?
Joachim Kreuzburg: We pointed out early on that we benefited from special effects from the corona pandemic in 2021 and 2022. One aspect was that the business with vaccine manufacturers is now gone, another that many pharmaceutical companies have significantly increased their inventories during this time in view of disrupted supply chains. Now they are reducing inventory to a normal level and temporarily ordering less. After that, the demand for consumables such as filters and disposable bags will increase again.

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Inflation, interest rate hikes and an impending recession are weighing on the stock markets. Investors should therefore invest in crisis-proof and high-yield stocks. These are the most successful of 2000 companies worldwide.

by Martin Gerth, Matthias Hohensee

The corona pandemic is coming to an end. What are the future growth drivers for Sartorius?
These are the same as before the pandemic. With our products, we enable our customers to develop and produce biopharmaceuticals faster and more cost-effectively. The basic growth drivers are the overall increasing and aging world population, combined with improved access to health services in emerging countries. All of this leads to a higher need for medication. Another important driver is innovation, for example advances in cell and gene therapy approaches. This then requires new technologies for development and production. These drivers are so sustainable that we continue to rate our prospects as very positive.

Are there upper limits to efficiency?
The biopharmaceutical industry has already made an incredible leap. For example, the efficiency of cultivating cells has increased by a factor of about ten since the introduction of the first biopharmaceuticals in the 1980s. Significant advances in productivity have also been achieved in the subsequent separation of the active ingredients. However, it would be very ambitious to increase efficiency by another tenfold. We consider a factor of three to be possible in the long term. However, this is only effective with new drugs. Because the production processes for medicines that are already on the market will not be changed.

Personal details: Joachim Kreuzburg

Because the production process of an active substance is part of the product approval process. If you change the production process, you have to go through at least part of the approval process again. This is not efficient for pharmaceutical companies.

How will the biopharmaceutical industry continue to increase its efficiency?
The chemical industry has had continuous production processes that run around the clock for decades. You feed in raw materials at the front and the finished product comes out at the back. Biopharmaceuticals, on the other hand, are manufactured in batches in many individual steps. After the production of a batch, the whole process is restarted. Further advances in productivity can therefore be achieved if as many process steps as possible are continuously carried out in production.

The pharmaceutical industry is currently looking for breakthroughs, for example in Alzheimer’s. Will future successes there bring Sartorius more business?
There is certainly a great unmet need for Alzheimer’s. However, our technologies are independent of the therapeutic application. Whether it is an Alzheimer’s or cancer drug makes no difference to us.

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So what is crucial for Sartorius?
What is important to us is the type of biopharmaceutical. Because that makes a difference in terms of the size and structure of molecules and thus also in terms of the technologies with which active ingredients can be produced. For example, the molecules of active ingredients in gene or cell therapy are larger and more complex than those of monoclonal antibodies, i.e. immunologically active proteins. These antibodies heralded the success of biopharmaceuticals decades ago and are responsible for most of the advances in cancer therapy.

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