investors presentation - sartoriusother biologics biosimilars ~ +25% cagr biosimilars: strong...

October 2018

Investors Presentation

Disclaimer

This presentation contains statements concerning the future performance of the Sartorius Group. These statements are based on assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, we cannot guarantee that they will actually materialize. This is because our assumptions harbor risks and uncertainties that could lead to actual results diverging substantially from the expected ones. It is not planned to update our forward-looking statements.

Throughout this presentation, differences may be apparent as a result of rounding during addition.

AgendaOverview and Strategy

Lab Products & Services Division

Bioprocess Solutions Division

FY 2018 Guidance | H1 2018 Results

Sartorius at a glance

4

Clear mission

A leading partner of the biopharma industry

Making R&D and production processes of innovative biologics more efficient

Biopharma market fueled by strong long-term growth drivers

Double-digit market share in key technologies

Diversified revenue base and high share of recurring revenues

Industry focus

Clear mission

Strong positioning

Attractive market

Stable business model

>7,500Employees

~ €1.4bnSales revenue

25.1%EBITDA margin2)

~13%Sales CAGR1) 2012-2017

30Countries

Based on FY 2017 figures 1) For continued operations, in constant currencies 2) Excluding extraordinary items

Molecule developmentCell line and process development

Production upstream & downstream



Quality | Testing | Validation

5

Strategic focus on the biopharma market

Strong market fundamentals

6

+6.5%CAGR

worldwideprescription drugsales 2017-2022

9bnpeople by 2050; >2bn 60 yrs or

older

Rise of biosimilars

~25%CAGR

biosimilar sales2017-2025

Strong R&D pipeline; advances in gene and cell therapy

~8%CAGR

biopharma market 2017-2025

>50% Share of biologics in pharma R&D

pipeline

Favorable demographics Increasing healthcare spending

7

19.7 20.1 20.521.0

23.6

25.0 25.1

18

19

20

21

22

23

24

25

26

27

28

29

30

0

200

400

600

800

1000

1200

1400

2011 2012 2013 2014 2015 2016 2017

Sales revenue more than doubled over the last 6 years

Sales revenue EBITDA1) margin in % Intec Division; divested in 2|2015

+13.6%

+9.3%

+12.6%+16.0%

+18.2%

+8.8%

Sales CAGR ~ +13%EBITDA1) margin +5.4pp

€1.4bn

€733m

~ €650m

Sales growth and CAGR for continued operations, in constant currencies 1) Excluding extraordinary items

Regional balance better reflecting end-markets

8

2011

Asia | Pacific ~ 22%

Americas ~ 25%

EMEA ~ 53%

Global pharmaceutical market Sales by region 2011

~ €650m

Sales by region 2017

2017


Americas ~ 32%

EMEA ~ 43%

CAGR ~ €1.4bn

2017


Americas ~ 51%

EMEA ~ 23%

~ €1.1tn

~ +16%

~ +15%

~ +11%

CAGR for continued operations, in constant currencies

M&A strategy – adding innovation, enhancing focus

9

2011 2018

Lonza CellCulture Media

TAP Biosystems AllPureTechnologies

BioOutsource Cellca kSep Umetrics

IntelliCyt ViroCyt Essen BioScienceDivestment

Intec Division

Acquisition criteria

Portfolio: Complementary products or technologies

Market Position: Either among the Top 3 or unique selling point

Integration: Management capacity; cultural fit

Price: Fair valuation; reach Sartorius‘ profitability level in 2-3 years

Infrastructure prepared for further organic growth

10

New ERP and extension of global IT infrastructure

Yauco, Puerto RicoDoubling of fluid managementand filter capacities

Goettingen, GermanyExtension of headquarters

Aubagne, France Capacity extensionof bag production

8.87.7

9.110.1

11.7

14.9 ~15

10

02468

101214

2012 2013 2014 2015 2016 2017 2018 2019

Capex ratioin %

~x% Major projects

Regular expansion~3%

Cap. R&D~2%

Maintenance

Capex composition 2018

~3%

~7%

20121) 20182)

1) Incl. discontinued operation 2) Based on 2018 guidance

20131)

Sartorius 2025 targets and initiatives

~28% EBITDA margin

~ 2|3Organic

~ 1|3 Acquisitions

Portfolio Add high-impact innovation, e.g. digital tools Enhance process development capabilities Expand into adjacent applications

Regional Participate in strong Chinese market growth Continue to outperform the important U.S. market

Operations Accelerate workflows across the organization

through digitalization Extend manufacturing base in Asia

11

Strategic initiatives 2025 targets

~€4bn1

Sales revenue

2025 targets are based on 2017 currency exchange rates; non-organic revenue growth is accounted for companies acquired from 2018 and onwards; EBITDA excluding extraordinary items

Sartorius 2025 ambition per division

12

SSB | BPS

~€2.8bnSales revenue

~30% EBITDA margin

~€1.2bnSales revenue

~25% EBITDA margin

~28% EBITDA margin

Sartorius GroupLPS

~€4bn1

Sales revenue

517.8

1,010.3

23.0

28.0

22

24

26

28

30

32

34

36

250

350

450

550

650

750

850

950

1050

1150

2013 2014 2015 2016 2017

+14.2%p.a.

Total solution provider for biomanufacturing

14

Global footprint

High share of recurring revenuesTrack record of dynamic growth


Americas ~ 35%

EMEA ~ 41%

+14.2%CAGR

Single-use products ~ 75%

Equipment ~ 25%

+16.5%CAGR

Sales revenue, € in millions; EBITDA margin1) in %

Division sales by region

Division sales by category

Based on FY 2017 figures; sales CAGR in constant currencies 1) Excluding extraordinary items

Snapshot of the Bioprocess Solutions Division

15

Quality | Testing | Validation

Downstream processingUpstream processingProcess development

Covering all steps of the biopharma process chain

Leading positions in key technology platforms

Sartorius Merck | Millipore

Danaher | Pall

ThermoFisher

GE Top 3 Players

Filtration1. Merck | Millipore2. Danaher | Pall3. Sartorius

Fluid Management

1. Sartorius2. Thermo Fisher3. Merck | Millipore

Fermentation1. Sartorius2. Thermo Fisher3. GE

Purification1. GE2. Merck | Millipore3. Danaher | Pall

Cell Culture Media

1. Thermo Fisher2. Merck | Millipore3. GE

Pie charts indicate completeness of product offering16

The biopharma market is not yet mature, but is maturing

17

... not mature because

Underpenetrated global market

Strong flow of innovation

Time-consuming product development

... but maturing because

Increasing importance of product costs and time to market

Robustness and ease of use of tools are becoming more important

Companies invest in market consolidation

>10+ years

Cum

ulat

ive

inve

stm

t(€

in m

illio

ns)

Data adopted from: Paul (2010) Nature Rev DD & Association of the British Pharmaceutical Industry (2017)

Cumulative investment and absolute survival rate in drug development

0

500

1,000

1,500

0

20

40

60

80

100

Targ

et t

o le

ad

Prec

linic

al

Phas

e 1

Phas

e 2

Phas

e 3

Regi

stra

tion

Abso

lute

sur

viva

l rat

e %

Enhanced process control and robustness

Improved product quality

Predictive process control

Digitalization is arriving in biopharma

Sartorius offers the leading software for bioprocess data analytics

18

Collect data

Monitor & control

Analyze

Improveprocess

Powerful solutions for modeling and optimizing development and manufacturing

Help to gain insights from complex data sets

Data analytics just at the beginning in biomanufacturing and shows high potential

U.S. remains most important market; China with highest growth rates

Biologics market growth forecastCAGR 2018 to 2022, $ in billions

U.S.~ 163

China~ 60~ $345bn

Europe~ 65

ROW~ 57

U.S.~ 115

China~ 33 ~ $250bn

ROW~ 51

Europe~ 50

~ +16% China

~ +9% U.S.

~ +7% Europe

19

Biologic market in China is at an early stage, but has strong growth potential

Supportive regulatory environment and solid industry foundation;biopharma considered a priority sector

Manufacturing capacity in China to triple by 2020

~ 230

~ 402~ 10

~ 58

2017 2025

Other biologics Biosimilars

~ +25%CAGR

Biosimilars: Strong growth, big opportunities

20

Biosimilars will outperform the biologics market€ in billions

Major blockbuster biologics are going off patent

Lower prices will lead to higher production volumes

Time-to-market is key as only the first fewbiosimilar providers are most likely to be profitable

APAC penetration relatively high; U.S. at the beginning

Leader in the growing single-use technology market

Single use products offer advantages over conventional stainless-steel devices

Capex|Opex reduction over entire lifecycle

Reduced risk of cross-contamination

Higher flexibility; advantageous for biosimilars

-25-35%

SUReference SU

-55-65%

ReferenceReference SU

-65-75%

Constructioncost

Energycost Water cost

-30-50%

Reference SU

Time-to-market

Single-use market penetration expected to increase from ~35% to ~75%

21

0

50

100

150

200

250

300

Limited dependence on individual accounts

More than half of 2017 BPS sales were generated with the Top 50 customers

No individual customer accounts for more than 5% of BPS sales revenue

No single drug accounts for more than 3% of BPS sales revenue

Limited dependence on individual accountsLong-term business relationships with leading global (bio-)pharma companies

Sales to Top 50 customersin 2017, € in millions

Top 10 11 to 20 21 to 30 31 to 40 41 to 50

Cumulativeshare~ 25%

~ 40%~ 45% ~ 50% ~ 55%

22

2)

Four strong pillars drive above-average growth

~ +11%Organic CAGR1)

23

0

2013 2014 2015 2016 2017 2018

Pharma market

Biopharma market

Single-use penetration

Market share gains

CAGR 4-7%

CAGR ~8%

Double-digit growth

Esp. in North America

1) CAGR 2013 to 2018e, excluding FX effects and acquisitions 2) Midpoint of 2018 guidance

273.8

15.9 16.0

10

15

20

25

30

35

100150200250300350400450500

2013 2014 2015

Snapshot of the Lab Products & Services Division

25

Global footprint


Americas ~ 25%Premium vendor for laboratories

EMEA ~ 48%

Division sales by region

394.2

16.018.0

~+1pp

10

15

20

25

30

35

100150200250300350400450500

2016 2017 2018e

Division in transition to a new growth and profitability profile

+1.4% +5.0%

Based on FY 2017 figures; sales growth and CAGR in constant currencies 1) Based on 2018 guidance 2) Excluding extraordinary items

2018e1)

+7.9% +22.0%

~ +12-15%

Build-up of bioanalytics portfolio

since 2016

Sales revenue, € in millions; EBITDA margin2) in %

Our ambition: Reduce costly trial & error in drug discovery

Drug discovery4 ½ years

Testing & improving1 year Clinical trials

5 ½ yearsDrug approval1 ½ years

€490m €110m €640m €60m

1 in 10,000Chance for a candidate to make it to market~€500m

Average costs of drug discovery

~10 yearsFrom drug discovery to approval

Facilitate digitalization and automatization

Lower likelihood of failure

Reduce time and costs in molecule development

Our approach

26Schematic example of biologic drug discovery with data from Association of the British Pharmaceutical Industry

Innovative platforms to increase biopharma R&D efficiency

Acquisition of U.S. companies IntelliCyt (2016) and Essen BioScience (2017)

Solutions for high-throughput and real-time quantitative cell analysis

Automatization, acceleration and improvement of basic research steps

Reduction of costs in drug discovery phase and clinical trials

IncuCyte: Real-time cell analysis IntelliCyt: Innovative cell screening

27

Platereaders3)

Bioanalytics portfolio with little competition and high value added

28

Rich

ness

of d

ata

Sample throughput per plate

Works on cells in suspension

Works on cells on 2D surface

Independent of cell attachment

1) Becton Dickinson, Merck Millipore, PerkinElmer, Thermo Fisher 2) Beckman Coulter, Becton Dickinson, Merck Millipore, Thermo Fisher3) Agilent Technologies, Danaher, Merck Millipore, PerkinElmer

IntelliCyt processes thousands of plates and generates large amounts of data for rapid and clear target identification

IncuCyte delivers video-based insights and improved workflows for real-time quantitative analysis of living cells

Microscopy High contentimaging1)

Flowcytometry2)

IntelliCyt

IncuCyte

Plate readers3)

~ 3.3~ 4.3

~ 0.8

~ 1.4

2018 2025

LPS ex bioanalytics Bioanalytics

+3.5%CAGR

29

Addressable market of LPS€ in billions

+10.0%CAGR

Bioanalytics increases addressable market and changes growth profile

Different growth rate of bioanalytics due to high exposure to biopharmaceutical R&D

By 2025, two-thirds of the addressable market growth will come from bioanalytics

Thus, growth and profitability profile of LPS is changingover time

Strong market position in key product categories

Leading positions in laboratory products used for research and quality control

Average global market share of > 10%

High gross margins offer potential for economies of scale

Growth potential especially in the U.S. and Asia

Lab Balances #2 Pipettes #4 Lab Filtration #3 Microb. Analysis #2(membrane based)

30

Scalable business with considerable growth and margin potential

31

Well established sample prep. portfolio

Premium instruments and consumables offering with strong global positions

Market share opportunities in certain regions to be addressed primarily by direct sales force

Unique bioanalytics portfolio established

Innovative technologies added through recent acquisitions

Combination with Sartorius’ global reach provides significant growth potential

2018 revenue outlook confirmed for LPS, raised for BPS and Group

33

Growth guidance includes non-organic contribution by recent acquisitions: ~ 0.5pp for BPS and ~ 2.5pp for LPS, i.e. ~ 1.0pp for the Group

Capex ratio ~ 15% (FY 2017: 14.9%)

Due to the U.S. tax reform, SAG´s tax rate is expected to decrease by 2pp to around 27% from 2018 onwards

FY 2018 Guidance1) Previous New

Sales revenuegrowth

UnderlyingEBITDA margin

Sales revenuegrowth

UnderlyingEBITDA margin

Sartorius Group ~ 9% - 12% ~ +0.5ppvs. FY17: 25.1%

~ 12% - 15% ~ +0.5pp

Bioprocess Solutions ~ 8% - 11%~ +0.5pp

vs. FY17: 28.0%~ 12% - 15% ~ +0.5pp

Lab Products & Services ~ 12% - 15%~ +1.0pp

vs. FY17: 18.0%~ 12% - 15% ~ +1.0pp

1) In constant currencies

Strong top-line growth; earnings margin 25.0%

34

Sartorius Group € in millions unless otherwise specified

H1 20171) H1 2018 in % in % cc2)

Sales revenue 702.5 758.4 +8.0 +11.9

Order intake 741.9 807.6 +8.9 +12.7

Underlying EBITDA3) 172.9 189.5 +9.6

Underlying EBITDA3) margin in % 24.6 25.0 +0.4 pp

Underlying EPS4) (ord.) in € 1.02 1.16 +14.1

Underlying EPS4) (pref.) in € 1.03 1.17 +14.0

Acquisitions contribute ~ 2pp of non-organic sales growth

Restatement of H1 2017 figures due to PPA finalization for Essen BioScience and Umetrics

1) Restated after PPA finalization 2) Constant currencies 3) Underlying = excluding extraordinary items 4) Underlying EPS = based on net profit afternon-controlling interest; adjusted for extraordinary items as well as amortization and based on a normalized financial result and tax rate

301.8324.4

172.2 184.4

228.5249.6

Growth in all regions; highest momentum in the Americas

35

Asia|Pacific ~ 24%

Americas ~ 33%

EMEA ~ 43%

~ €758m

Acc. to customers‘ location; growth in constant currencies

+12.2 %+16.6 % +8.4 %

H1 17

Americas€ in millions

EMEA€ in millions

Asia|Pacific€ in millions

Sales by Regionin %

H1 17 H1 18H117H1 18 H1 18

Americas: BPS with high momentum versus moderate comps; LPS growth fueled by Essen acquisition

EMEA: Robust performance driven by BPS growth; weaker markets for LPS

Asia|Pacific: Both divisions with solid growth rates against high comps

140.0 153.9

H1 17 H1 18

BPS: Strong performance in Q2

36

Order Intake € in millions

Sales Revenue€ in millions

Underlying EBITDA & Margin€ in millions

546.9 594.6

H1 17 H1 18

510.1 550.3

H1 17 H1 18

27.4%28.0%

+12.6% cc+8.7%

+11.9% cc+7.9%

+10.0%

Significant sales growth with single-use products; cell culture media business picking up

Umetrics acquisition contributes close to 1pp of non-organic sales growth

Order intake includes equipment projects; somewhat above expectations

Underlying EBITDA margin rises against unfavorable FX due to economies of scale

LPS: Continued positive development in line with expectations

37

Essen BioScience acquisition contributes ~5pp of non-organic sales growth

EBITDA margin reached prior-year level as positive economies of scale and less favorable FX leveled out

33.0 35.5

H1 17 H1 18

192.4 208.1

H1 17 H1 18

17.1% 17.1%

+12.0% cc+8.1%

+7.8%

195.0 213.0

H1 17 H1 18

+13.1% cc+9.2%

Order Intake € in millions

Sales Revenue€ in millions

Underlying EBITDA & Margin€ in millions

Cash flow influenced by higher earnings and lower taxes

38

Net operating cash flow considerably enhanced by higher earnings

Net investing cash flow in previous year primarily reflects the Essen and Umetrics acquisitions

Capital expenditures in line with expectations

Sartorius Group € in millions unless otherwise specified

H1 20171) H1 2018 in %

Underlying EBITDA 172.9 189.5 +9.6

Extraordinary items -14.7 -13.9 +6.0

Financial result -14.9 -11.0 +26.0

Underlying net profit2),3) 69.9 79.8 +14.1

Reported net profit3) 46.1 57.3 +24.4

Net operating cash flow 54.3 92.0 +69.2

Net investing cash flow4) -436.1 -97.4 n.m.

Capex ratio (in %) 12.9 13.2 +0.3pp

1) Restated after PPA finalization 2) Underlying net profit = net profit adjusted for extraordinary items, amortization and based on a normalized financial result and tax rate 3) After non-controlling interest 4) Net cash flow from investing activities and acquisitions

Key financial indicators remain at robust levels

39

Key Financial Indicators

Sartorius Group 31.12.17 31.06.18

Equity ratio in % 35.1 34.9

Net debt in millions of € 895.5 955.3

Net debt | underlying EBITDA 2.5 2.60.0

0.6

1.2

1.8

2.4

3.0

0

200

400

600

800

1000

Q1-Q42014

Q1-Q42015

Q1- Q42016

Q1-Q42017

Q22018

Net debt in millions of € (lhs)Net debt to underlying EBITDA (rhs)

Net Debt and Net Debt to Underlying EBITDA

Appendix

Sartorius shares – an attractive investment

41

High entry barriers, low price-sensitivity and consolidated

competitive landscape

Biopharma market fueled by long-term growth drivers

Leading market positions in key technologies and high

brand awareness

Global presence with strong base in growth regions

Diversified revenue base and high share of recurring

revenues provide low volatility

Proven growth track record: Sales CAGR of ~13% over the

last five years

Sartorius legal & operational structure

100%~ 74%

Other Sartorius Subsidiaries

Lab Products & Services DivisionBioprocess Solutions Division

Sartorius Group Operational Setup

~ 74% Sartorius AG ~ 26% Free float

Sartorius AGStock market listed in Germany1)

Sartorius Stedim Biotech S.A. Stock market listed in France

> 50% Administered by executor ~ 34% Bio-Rad Laboratories ~ 9% Treasury shares ~ 5% Family owned ~ 2% Free floatO

rdin

ary

shar

es ~ 91% Free float ~ 9% Treasury shares

Pref

eren

ce sh

ares

Sartorius Group Legal Setup

42

1) Information on shareholdings and shares in free float pursuant to Sections 33 et seq. of the German Securities Trading Act (WpHG). Reporting obligations refer only to ordinary shares and not to non-voting preference shares.

Fermentation & Cell Culture Media

Extract of the Bioprocess Solutions’ product portfolio

Filtration Purification

Fluid Management

43

Pipettes

Extract of the Lab Products & Services’ product portfolio

Filtration | Lab Filtration

Lab Balances | Lab Water Systems Bioanalytics

44

Recap 2020 targets and initiatives

~€2bnSales revenue

~ 3|4Organic

~ 1|4 Acquisitions

Portfolio Complementary extensions through alliances

and acquisitions Own product development

Regional Gain share in North America Leverage strong market growth in Asia

Infrastructure Expansion of production capacity Significant investments into IT infrastructure

45

Strategic initiatives 2020 targets

~26-27% EBITDA margin

2020 targets are based on 2015 currency exchange rates; EBITDA excluding extraordinary items

Executive Board of Sartorius AG

Rainer Lehmann, CFOsince 2017

Finance, IT, Business Processes

Joachim Kreuzburg, CEOsince 2003

Corporate Strategy, Legal & Compliance, Operations, Communications, Human Resources

Reinhard Vogtsince 2009

Marketing, Sales & Services

46

Petra Kirchhoff

Head ofCorporate Communications & IR

Phone: +49.551.308.1686E-mail: [email protected]

Sartorius Corporate Administration GmbHOtto-Brenner-Straße 2037079 Goettingen, Germanywww.sartorius.com

Financial calendar and contacts

47

Ben Orzelek

Head ofInvestor Relations

Phone: +49.551.308.1668E-mail: [email protected]

October 11, 2018SdK Private Investors Event | Rendsburg

October 31, 2018Société Générale Roadshow | Paris

November 12, 2018HSBC Healthcare Day | Frankfurt

January 10-11, 2018Oddo Midcap Conference | Lyon

investors presentation - sartoriusother biologics biosimilars ~ +25% cagr biosimilars: strong...

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