Published Last Week

Aldevron: mRNA, Plasmids and Synthetic DNA

In mid-2021, Danaher acquired Aldevron, a manufacturer of plasmid DNA, mRNA, and proteins, for $9.6bn. In its press release, Danaher reported that:

This acquisition will expand our capabilities into the important field of genomic medicine and help us support our customers and their critical mission to bring more life-saving therapies and vaccines to market faster. - Rainer Blair, Danaher CEO, 2021

This interview with a Former VP of Sales at Aldevron explores the history of Danaher’s acquisition of Aldevron, what was challenging, and where the opportunity lies today. 

One major attraction to Danaher during COVID was Aldevron's fast-growing mRNA business, believed to be the next revolutionary technology yet the market is now in decline. The technical barriers to entry seem to be a challenge with the mRNA business relative to DNA:

The advantage of mRNA is that you don't need any cells; it's a cell-free process. This allows many companies to quickly claim they offer GMP RNA services on their websites. I know of a few companies that advertise GMP RNA services, but they've never actually produced GMP RNA. They have the capability and the facilities if needed, but they don't actively do it. When I was responsible for proposals and bids, the landscape changed from companies reaching out to me, considering three or four options, to competing against 10 to 15 different vendors. They would conduct an initial screening with questions and then narrow it down to the top five. This happened because many companies advertise RNA services, but some are just offering vaporware. That's why it's so competitive. - Former VP, Sales at Aldevron

Danaher's longer-term goal is focused on genomic medicine personalised to each individual. The challenge in scaling personalised medicine lines in the cost; creating plasmids for each treatment at attractive unit costs is difficult. This is where synthetic DNA comes in. Although it’s nascent, synthetic DNA is quicker to process and purify than standard plasmid DNA and remains a large opportunity for Aldevron:

With typical standard plasmid DNA, you have a bacterial clone that you pick from a plate, scale up in some broth, shake it, and grow it to a certain density. The hardest part of scaling up DNA is lysing the cells, purifying away impurities, and extracting the DNA. This is where Aldevron excels with their lysis technology. For synthetic DNA, it's done with a fragment of synthesized DNA and enzymes. The enzymes mimic what happens in cells. The risk is ensuring all enzymes are removed from the product. The advantage is you're not using bacterial cells, so there's no concern about ampicillin-resistant cassettes. Regulatory bodies worry about these being left in the product. The advantage is having fewer organic, living components in your product compared to traditional DNA, and the process is much quicker. It takes hours and days instead of a week to shake, purify, and process the DNA. - Former VP, Sales at Aldevron

The interview goes on to explore how mRNA and DNA competition has evolved since COVID and Aldevron’s relationship with Moderna, its largest customer.

RBC Bearings: DODGE Mission Critical, Heavy-Duty Applications

RBC Bearings is a mission critical, precision bearings manufacturer. This interview with a Former Dodge Sales Engineer explores how RBC’s focus on total cost of ownership drives savings for end customers whilst also driving healthy margins for RBC:

Previously, they were probably paying $40 to $50 per bearing. After the change, it was $150 to $200 per bearing. They accepted this gladly because we demonstrated the savings. When you have unplanned downtime, your costs can be astronomical. In some industries, like the steel industry, for instance, when steel is coming out of a mill, there's a long line of conveyance. Pulleys are driven by gearboxes connected by a coupling to a pulley. They were using a range of products, many from Regal Rexnord, which has acquired numerous brands. AMI and IPTCI were some of the other big ones. They had a lot of Regal brands and some cheaper brands, including some Chinese products like AMI and IPTCI. We switched them from cast iron to stainless steel. Their costs increased by a factor of four, but they were willing to pay for the savings. I documented savings for them of about $100,000 to $150,000 per year. Even though they were now spending $50,000 a year on bearings, they significantly reduced unplanned downtime - Former Sales Engineer at Dodge Industrial

During WWII U.S Allies were bombing bearing manufacturing centres in Germany:

Well, think about limestone production. If you can't convey the limestone out of the pit, you can't sell it. That is the business. The same goes for food production. If you can't move it through your production line, that's the business. There are more expensive pieces of equipment involved in food production, absolutely. But the bearing can often be the difference. To illustrate, during World War II, about 60% of what the U.S. allies were bombing in Nazi Germany were bearing manufacturing centers. Without bearings, you don't have machinery or industrial production. You can't make more tanks or anything else. It's surprising how important bearings are. Any reliability engineer whose entire plant has shut down because of a faulty bearing will understand. In many industries, bearings are the mission. They are crucial - Former Sales Engineer at Dodge Industrial

Hermès: Resilience in the Chinese Luxury Market

In Q2 25, Hermès reported annual sales growth of 9% while LVMH sales declined 9% and the wider luxury market is under pressure. This interview with a Former Sales Manager at Hèrmes APAC explores how the brand is positioned across China and overall resiliency relative to Vuitton and other brand.

One interesting observation highlights the changes in the Chinese cultural perception around luxury consumer spending:

I don't think luxury shaming is as strong as it once was. People are spending their money differently. For instance, Swiss Michela and Shanghai are doing well, and the hospitality sector is thriving. People are spending more time with their families, valuing those connections more. Some mention a kind of spiritual awakening in China, which seems true. They are becoming less materialistic and more mature, but it's still a huge market with 1.2 billion people. - Former Sales Manager, Hèrmes APAC

And how bags continue to drive growth:

Hermès is maintaining their status as a refuge for quality and their ready-to-wear is doing well, they're about to start couture, which the market is eagerly anticipating. Chanel also has a new couture designer, whose name I can't recall, but I expect he'll be amazing. These three brands form a magical triptych, and I'm not too worried about them. However, they are struggling with certain products like silk, perfumes and fashion accessories, particularly for Hermès, are not performing well. To secure growth, they're releasing more bags, which is effective and appealing. - Former Sales Manager, Hèrmes APAC

Deere & Company: Spare Part Business Economics

This interview with a Former Deere leader of the spare parts business shares insights into the growth and profitability of the division:

That mindset has always been there, but corporate considerations or goals around it really changed about five years ago. They went through a big reorganization and set up a new division called the Lifecycle Solutions division. That's when they really put the spotlight back on the parts business. It was set up as a separate unit with a separate president, separate financials, and the whole ball of wax. It was run just like a separate business starting about five years ago. Now, it's a critical piece of their business because it generates over $7 billion in revenue with about a 50% plus margin. - Former Manager at Deere

Deere has exclusive suppliers on many goods include oil and filters:

Deere also had exclusivity, and actually, it was exclusivity forever with their engine oil and hydraulic oil. The oils like Plus-52 and Hy-Gard, their two primary oils, are Deere exclusive. Those formulations can never be sold to anybody else. Deere primarily dealt with Shell, and in the US, it was a local blender, but Shell is their largest oil supplier worldwide. The formulations for their engine oil and hydraulic oil are Deere exclusive and can never be sold to anybody else ever. - Former Manager at Deere

The interview also goes on to explore how Deere works with suppliers to secure exclusive contracts that prevent suppliers selling into the aftermarket and destroying Deere part margins.