Avantor: Post-Pandemic Bioprocessing Competitive Landscape

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Could we start by discussing the broader attractions of the bioprocessing industry? When we look at Avantor, they've made several acquisitions in this area. They emphasize the mission-critical nature and the custom-made, proprietary aspects of their products. Could you explain how these products are specified into the manufacturing process, their mission-critical nature, and the challenges of switching out supplies?

You could say there was an ultra-sticky and slightly sticky; core, non-core, critical, and non-critical, depending on how you want to label it. We used to call it critical and non-critical. The non-critical segment is significant business. If €100 was spent on manufacturing a product, about €15 could be non-critical. So it's relatively significant. If you're interested, about 20% of that revenue was spent on cell culture media, which is a substantial amount. Around 10% to 15% was spent on chromatography media, approximately 8% on virus filtration, around 20% on single-use, and the rest on filtration.

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Can you contextualize the size of these companies and whether the hegemony is losing share, or is that not yet evident due to longer-term customer contracts and similar factors?

Yes, there is share loss. I can't quantify it because I don't have the data, but there is definitely share loss in filtration and single-use, and some share loss in chromatography as well. Cytiva is definitely feeling share loss in chromatography. Up until four years ago, before these new entrants started to make a change, the industry was consolidating to have one touchpoint. For example, Merck bought Sigma, Danaher bought Pall and Cytiva. The whole idea was to provide everything needed from subculture media to the final fill filter. That approach never provided value to customers. There was never any positive synergy from a technical point of view from buying product A from Sartorius and product B from Sartorius. Nobody ever cracked that. There was never any product synergy.

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