Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

We're looking to understand the durability of Pall's filter and SUT business comparing Medical and biotech segments. Perhaps a good starting point would be to understand more about your background. Specifically, I'm interested in your initial responsibilities at Pall and how they evolved over a decade.

I studied biology and earned my PhD in biochemistry. After completing my studies, I wanted to transition into the industry, as the academic career path was too uncertain. I didn't want to constantly change roles every two to three years, which is often the case in academia. Pall had an open position for a scientific lecturer, which I accepted. I was part of a small group within the organization that reviewed literature to support product positioning. We used scientific data to bolster product placement in the market and aid sales discussions with potential customers. We also attended congresses to stay abreast of new scientific trends and strategic ideas. I started in 1993, so it's been over 30 years now.

You've witnessed the transition from small molecules to biologics?

Indeed, there's a lot of traditional product portfolios in the industry. However, there's also a lot of movement in terms of application and usage. Technological advancements are evident in certain areas, while others remain the same as they were 30 years ago.

Could you elaborate on what you mean by basic portfolio?

The basic consumables in our portfolio, which we use daily, have remained largely unchanged. We still use the same pipettes, glass reservoirs, and tubes. There's been some development in equipment, but no major breakthroughs. The technologies are similar, with devices becoming smaller, more sophisticated, and perhaps more accurate. It's rare to see something completely new. When looking at company portfolios, such as Danaher's, it's clear that there's more emphasis on advancing existing technologies rather than developing new products. This is my personal observation, although others may see it differently.

Why is that the case?

The reason is that developing something new requires a lot of effort and time, with a low success rate. It requires a well-organized company and a logical approach to project management. It also requires patience, as development can take five to six years. However, these time frames have changed. In the past, companies were given five to six years to develop something new. Now, the trend is to expect a return on investment within three years. This means only one or two years are allocated for development, with the expectation that sales will cover the investment within three years. This approach, driven by financial considerations, often leads to rushed development and introduction. This is a lesson that management has learned from consultants and advisors.

You're suggesting that this shift to a shorter financial payback period has hampered innovation. Does this apply specifically to filtration, or does it also include single connectors?

I'm referring to medical applications in general, not just filtration. Although I have a good understanding of filtration, I've seen a similar scenario in other companies I've worked for, such as Haemonetics, and in the OEM business where I dealt with raw material suppliers for development. This approach seems to be common across the board. It's also why Danaher acquires companies rather than growing organically through business development.

I have a question regarding the European Commission documentation on Danaher's acquisition of GE Cytiva. I noticed that GE had a long-standing market share in microcarriers and Pall in filtration. These market shares seem to have remained consistent over 10 to 15, even 20 years. What could potentially threaten these market shares? For instance, could there be a significant change in the market in the next 10 to 15 years that would allow another competitor to take over Pall's market share in filtration? 

The primary risk from a Pall perspective is that Asian companies, like those in China, are doing exactly the same thing without infringing on patents. This is always a concern as they could potentially replicate products in a way that doesn't infringe on patents or when the patent has expired, and then sell it at a cheaper price with the same quality. In the past, quality was a concern as it was challenging to maintain a consistent level of quality over the years or across different production batches. However, this has improved. Therefore, American-based companies like Pall and GE need to ensure they are always one step ahead of what the Asian market can replicate. This requires continuous development and innovation. They cannot afford to rest on their laurels just because they have a significant market share or are the market leader. There's always a risk of being overtaken. Typically, the strategy is to invest heavily, but like GE and Pall, they tend to acquire rather than invest. This is similar to what Danaher did. Pall also acquires companies to help them scale, increase flexibility, and enhance their understanding of the technology, which aids in steering their large-scale operations more swiftly in the direction they want to go.

How challenging is it for Asian or Chinese competitors to replicate, for example, DFF or TFF filters?

It's not that simple, which is why it has taken so long and why the market share has remained consistent over the years. A membrane may seem simple, just a mesh with holes of the same size, but it's not. You need to ensure the structure is always the same, the holes are always the same size and in the same place. It also needs to function effectively in terms of surface, depth, and retaining rates. From a batch perspective, it's like baking a cake. You always use the same ingredients in the same amounts, but the end product can vary. You might end up with a good cake, or a not-so-good one. This is where expertise comes in. You need to understand not just the individual steps, but also the overall process and what needs to be adjusted to ensure consistent quality. This is where production or process control expertise comes in. This is what Asian competitors, like those in China, need to learn more about. They understand the ingredients and the process, but they lack the nuanced understanding required to ensure batch consistency. That's what membrane production is all about.

Just to clarify, you're talking about the filter used in the TFF or DFF filter, correct?

I'm referring to filters in general. It's about the flow rate in the TFF, or tangential flow. The same applies to other filtrations for vaccines and other products, where you need to ensure a certain retaining rate.

How far are the Chinese from achieving this?

It's difficult to estimate. I've seen a few companies that are very close because their approach is either to replicate or replace applications and overhaul the business. Some companies are now taking this seriously, ensuring that everything is always under control and playing the quality game as well. So, it's coming.

Would customers consider purchasing from Chinese or Asian suppliers in this aspect?

What's missing is the branding and understanding of quality consistency. That's why many people fear that if you have a vaccine production batch worth $2 million and you put that through a filter from China, you're not sure if it will function in the end. That's where the struggle lies. As long as you're willing to test it out and find out, then of course, you'll discover that some companies can consistently produce quality, but others are still fearful and don't want to take the risk.

Let's take a step back then. From your perspective, why did Danaher acquire Pall?

First of all, from my understanding and what I've heard, Danaher always selects key players. They don't acquire small companies, they always acquire someone who is a key player in a market application that might be of interest to them from a portfolio perspective. In the case of Pall, it was mainly driven by the fact that there was a unique pharmaceutical business with standalone technology, especially for vaccine filtration and biotech capabilities that were not yet explored or tested. They saw potential that was not yet realized within Pall. At that time, Danaher was split between, let's say, 50% life science and 50% industrial. They observed that the industrial part wasn't growing as fast as the life science part in the world's overall economics. So, they bet more on the life science part. That was their biggest acquisition at that time, and it was driven by the pharmaceutical potential of filtration and biotech applications.

Did the medical side play a role?

No, not at all. It was just an extra part of the deal, which they had to buy as well. If they didn't have to buy it, they wouldn't have taken it.

From your experience, did you work on both the biotech side and the medical side?

I was involved in the medical side, but there were some intersections with biotech. That's when Pall began to venture into the biotech market. Around 2011 or 2012, they began their first biotech endeavors, considering the use of scale-up production technologies for smaller biotech applications. At that time, cell therapy was not a consideration. If you had asked the management of Pall about entering cell therapy applications, the answer would have been a resounding no due to the perceived risks and conservative approach.

The growth started in 2011 or 2015?

2015, as well. The approach to cell therapy began almost accidentally within Pall. When Danaher acquired the company, they saw the potential and pushed for further development. However, they didn't fully exploit this potential as Pall alone. One of the key links between the two sides was blood filtration. Pall's blood filtration technology was acquired by Haemonetics as part of the deal. I believe Danaher didn't want this part, and Pall needed to sell it to make the company more attractive for acquisition.

Pall sold the blood business to Haemonetics, who were missing this filtration part in their portfolio. This made for a good match. Within this blood filtration technology, there were different levels of membranes used to capture specific cells from the blood flow. These cells could potentially be used for therapy if released from the filtration media.

We started using a filter designed to reduce leukocytes from the bloodstream. These leukocytes were trapped in the material and were found to release mediators that could potentially help treat certain areas. We had a product at the time called E-PET, which was used in animal experiments for dogs and horses. The concentrated cell mixture was infused into the knees of these animals to reduce enzymatic reactions and aid in healing. This was particularly beneficial for race horses, as it could potentially shorten their recovery time.

This was the starting point for Pall's involvement in cell therapy applications. However, it was never intended for human use due to the potential regulatory risks and the management's reluctance to expose the company to such risks.

Why not?

The management was concerned about the potential negative publicity if a patient was harmed or killed due to the treatment. This could expose the entire company to risk.

I was examining the old Pall financials, and I noticed they divided the medical business into blood with direct and OEM, cell therapy, and hospital, like infection control. Is this how it was organized internally? If not, how was the business structured on the medical side?

Prior to the acquisition of Haemonetics, we had a blood unit that dealt with blood centers and hospitals, selling blood filtration technology. There was a separate unit called 'hospital' that sold infusion line filters, breathing filters, and water filtration filters to hospitals. Then there was an OEM division that sold membrane technology, in either sheets or rolls, in various formats to companies for their own branding and market distribution.

Before Haemonetics was acquired, the blood unit was a $450 million business. Half of it was sold to Haemonetics, who bought about $220 million to $230 million of the business. The remaining $220 million to $230 million was split between $90 to $100 million for OEM, and the rest for the hospital unit. Cell therapy was minor, contributing maybe one, two or three million.

Who were the major OEM customers you were selling to?

We sold to virtually every major company in the medical industry, including B. Braun, who were one of our biggest customers. These companies typically produced IV lines and wanted to integrate our filters into their lines and brand them with their name.

When the blood business was sold to Haemonetics, you were left with a relatively smaller business in medical, which included the hospital, the OEM, and a bit of cell therapy technology. How did Danaher view this business in terms of strategic value?

I believe Danaher didn't really focus on that. They tend to keep the brand, appoint a high-ranking manager from within their organization as CEO of the newly acquired company, and then implement the Danaher Business System (DBS). This process oversees all organizational activities related to company management. They don't interact on a daily basis from a management perspective, but they implement rigorous processes for reporting and target setting. This rigorous approach to integrating acquired companies is part of what makes Danaher so successful.

I'd like to discuss DBS in more detail later. For now, let's briefly touch on Pall's products for hospitals. Are we talking about the Aquasafe water filter? How unique are these filters? Why can't a Chinese competitor compete with them? They don't seem too complicated from an outsider's perspective.

That's a good point. To give a brief history, Pall Medical started with breathing filters and infusion line filters. That's how the division was born. However, as the market matured, it reached a plateau and then started to decline. From a hospital perspective, during my tenure, we saw a decline in breathing filters and a stagnation in IV, infusion line filters. The new market was water filtration, and at that time, there were only one or two competitors.

Why were the IV and breathing filters declining?

There were many competitors who invented similar membrane technology housed in a more appealing, compact, and efficient design.

Were these competitors from Asia or the US?

No, they were primarily from the US or Europe.

Were they cheaper than Pall?

Significantly cheaper. Initially, breathing filters were priced around $20 each, but the price has dropped to about $2 or even less now.

How is that possible?

When you're one of the main suppliers and you invent the application and usage, others will eventually come in. They either have an advanced story or they invent a more user-friendly design. For instance, our housing was too sharp and big, and competitors invented a rounded, smaller housing that was easier to breathe through.

Why can't this happen in biotech? If we look at chromatography or filtration, such as ultrafiltration, depth filtration, and various types of virus filtration in the biotech process, why can't we see a similar situation as we did with breathing filters? How do you compare the two?

The major difference lies in how it's regulated and implemented. In a hospital, a breathing filter just needs to meet certain specifications related to breathing circulation and resistance. In biotech, however, you validate a product within your process. It's linked to the prior step, the next step, and so on. It's a whole process that you validate through extensive testing to ensure it meets the overall specifications.

It's more about being specified in the entire process rather than just the breathing filters.

The breathing filter, as long as it maintains the same technical specifications, can be easily replaced. In the biotech pharma market, even if you specify the same technology, you're still not validated in the overall process. This is another level that needs to be achieved. As I mentioned earlier, some people are unwilling to revalidate things due to the effort it took to make it work initially. They have a working system and see no reason to change it, especially not for a minor cost reduction.

How does the blood filtration business compare?

It was even worse. That's why Pall wanted to divest it. Blood filtration pricing was around $100 to $120. I remember that a filter cost between $100 to $120 when I left. This was for bedside filtration. Then there was inline filtration, or process filtration within a blood center unit, where you have thousands of blood units being filtered in parallel. This involves machinery and automated systems. In contrast, bedside filtration involves one patient needing a filter. In the blood bank, you have large quantities, whereas at the bedside, you have smaller quantities. Bedside filtration cost $100 when it started. Within the blood bank, the pricing was about $30 to $40. It was discussed to go below the $5 range when I left, but you couldn't produce it for $5. The issue with Pall was that they were not prepared to go to such low pricing. If you start with a pricing of $50, you don't have the efforts to get it down to that level. Competitors were prepared to produce filters for less than $5, or just accepted that you make margins of 5% or 10%. Paul was never willing to do so, because of the associated risks.

What was Kingsley's opinion on that division? Was he content to let the volume decline? How did he perceive the growth or margins for that medical business?

The management decided they wanted to maintain higher margins and less volume. That was Pall's decision. Other companies were more focused on fulfilling the capacity on their manufacturing sites and didn't care much about the margins. This was a critical point for Pall in the end.

You mentioned how biotech is very different from the hospital side. The filters are specified into the process and validated at the regulatory level, even though you may be able to switch a TFF filter for another TFF filter from a different company. Are there any filters in the biotech side that are not specked into the process?

I wouldn't think so. In this environment, everything is somehow specked in. I can't think of anything where you don't have a real regulated and spec in the connectors.

What about single-use connectors, like the small wire?

To me, that is a consumable that isn't related to consistent processes. There is a connection, and it's crucial to ensure these connections are properly done. However, I believe this falls more into the category of a breathing filter, where the technical specifications need to fit. I'm not an expert on this, so I may be wrong. There might be some kind of proof, but it might fall into a lower specification grade.

Which parts of the biotech process, including equipment, tools, or consumables, do you think are most at risk? Similar to the breathing filters, for instance?

Systems are increasingly moving from a stainless steel housing perspective to more consumables, even in the bioprocess. This includes filters and bags, both large and small. It requires less effort to change or replace these, but validation still needs to be done. The less valuable it is, the easier it is to replace. However, expertise in bag production is also needed. Producing single-use bags may sound simple, but it requires specific knowledge.

Are you referring to the bags that go in the bioreactor?

Yes, that's correct. Expertise is needed in that area. That's why Pall acquired a company capable of producing these bags under the right conditions and with the right quality.

For the first part of the standard process, you've got the single-use bags that you swap out every batch. When I specify my process, can I specify two different bags from two different companies, like Pall and Merck, for instance? How easy is it to switch the bag?

Typically, you wouldn't do that, but some smart companies do. If they have the opportunity to specify two different companies from the beginning, they will try to do that for flexibility. However, a production site would normally only specify one producer, not two.

How long does it take to switch? Let's say if I use Pall and I want to switch to Merck.

It would take around six to eight months.

So, it's possible, but it's just more of a headache.

Exactly. You need to do it if, for example, your supplier runs out of material. Then you have to validate someone else. Sometimes, the first supplier's inability to continue production drives the need for a second supplier. However, you wouldn't want to spend eight months validating something that's already running and working. You'd rather focus on other things that need to be covered.

On the biotech side, are there any other products in the consumable side that could be at risk, similar to breathing filters, due to competition?

As I mentioned earlier, the Chinese are likely more experienced in high-quality production capabilities for single bag products than Europeans. Typically, companies like GE and Danaher or Pall, prefer not to include Chinese suppliers in their processes and supply chains. This is a sentiment I've heard several times. It may have changed recently, but they generally do not want to share expertise with potential competitors.

How do you think the shift from batch to continuous process will impact the business from Pall's perspective?

Honestly, I wouldn't be able to provide a proper answer to that. It's not my area of expertise. However, it might require some changes from a technological perspective. If you have a stop and start process, you know exactly what your filtration membrane's capacity is. If you have a continuous filtration process, you need to understand the continuation up to the limit of your membrane's capabilities. This requires a different validation and understanding of your membrane technologies and limits. But again, this is just a comment and not an expert opinion.

Danaher has obviously focused on the biotech side, somewhat overlooking the commoditized medical side, specifically cell therapy. How did Danaher change the cell therapy focus at Pall after the acquisition?

I'm not sure, as I was not part of the post-acquisition period. I believe they utilized the assets and expertise in the biotechnology of the pharmaceutical division within Pall to drive interest in cell therapy. The previous management at Pall was not willing to do so. Danaher, however, showed interest and invested significantly, which hadn't happened before.

Taking a step back, how do you view the opportunities and challenges for cell therapy use cases today and in the future?

In my opinion, cell therapy is a huge market, but it carries a lot of risks. You need to ensure the safety of your application, and proving safety in cell therapy requires extensive testing and control. This is something a serious company like Danaher might be able to manage. However, if smaller companies also enter this field and make mistakes, it could damage the overall reputation of cell therapies. If something fails due to risks posed to patients through non-quality controlled processes used in this application, the market could suffer before it truly takes off. That's a potential risk I see.

Could you walk us through the cell therapy process? Where are the biggest risks? Where does it typically go wrong?

The use of biological material, which is not always fully controllable, is typical. For instance, consider stem cells for cell therapy. Everyone wants to use stem cells because they can develop into anything. As long as you control their development, everything works out. However, the issue arises when you lose control over the stem cell development.

Why can't you maintain control?

If a stem cell in a therapy doesn't develop correctly and becomes a malignant cell type, you risk treating a patient on one side and giving them cancer on the other. Cell therapy involves biological material. As long as you take this seriously and implement necessary safety measures, it may work, even with less exposure therapy. However, it takes time, and I'm unsure if every company is willing to allow this time for development, given their ambitious plans.

To delve a bit deeper, which part of the process involving biological material is the most challenging to manage?

The initial stage of the material is the most challenging. Once a process is established, you can maintain control over the different stages and ensure the quality of the final stage. With stem cells, for instance, you need to program them correctly and ensure they don't deviate from their intended path.

What about the bioreactor phase, when you're growing these cells?

The bioreactor phase is somewhat controllable. You might have uncontrolled growth, but you can still manage to monitor what comes out of the bioreactor and select the good from the bad. As long as you maintain that control, it's fine.

How do you view the risks in the perfusion systems or the final downstream part of the phase, compared to the control in the actual cell growth?

I don't believe there's much risk there. The system used just needs to ensure there's no adherence or change in the behavior of the cell due to contact with an unusual surface. This needs to be checked. But the application system itself is typically quite straightforward, so I don't see it as a significant risk, although others may have a different opinion.

What are your thoughts on electroporation? Have you looked into that process?

I'm sorry, I have no idea.

Returning to Danaher's acquisition, how did you see them deploy DBS in the short time after the acquisition? How did they change things?

If we're talking about the medical division, there were a lot of problems related to this acquisition. Danaher is familiar with acquiring companies that use a systematic approach and system sales. They sell a process, a system, or an instrument. However, the main part of the medical division, as discussed, was consumables and day-to-day sales. You don't have to start a project to sell breathing filters, or go through a staged sales process to first increase interest, then do an evaluation, and so on. You just position your product, and then you either get an order or you don't. This doesn't fit into Danaher's system approach. They tried to implement a system that didn't work for this kind of business, and that's where they struggled to implement their overall perspective. The medical division was not easy to integrate into their system, and that was a big issue at the beginning. I wasn't part of this, but I know for sure that others reported about it.

Quickly returning to cell therapy, what products did Pall have in cell therapy? Did they have any?

As we discussed, Pall did not develop any cell therapy applications. What they had were filtration technologies, TFFs, as you just mentioned, and the bag systems were just starting to be produced. They were just ramping up consumable sales from stainless steel change to one-time usage. That was just the time when Danaher acquired Pall.

Let's say, if cell therapy takes off over the next 10 to 15 years, how well positioned is Pall's filtration business for cell therapy applications versus traditional biologics today? Could there be other competitors that come in and win the filter business for whatever reason? If so, why?

They're quite well positioned, especially with the acquisition of GE. What they need to check, and what is most likely part of their acquisition plans, is to be more on the biological side. That means producing cells and biological materials which would be used for cell therapy, rather than just the process part.

You mean the media?

Yes, the cell media and all that kind of thing is part of GE, as far as I understand. Maybe it's already part of a GE acquisition, but it's not large enough, I would say, to be a competitive threat.

And why didn't Pall have any media?

As I said, when Pall was run by their own management, that was not part of their strategy. They wanted to be conservative with the business of filtration in different parts of applications. But that was falling out of their core technology's interests.

Could you discuss the potential risks to Pall if cell and gene therapy were to significantly expand? How would this impact Pall's filtration business? How does the manufacturing process of cell and gene therapy differ from current biologics? Would this mean that the DFF and TFF filters would be less in demand, or are they still required in that process?

I believe Pall is well-positioned if cell and gene therapy ramps up as expected. There aren't many filtration companies with such expertise in biological material filtration. As long as a filter is needed in the process of cell therapies, Cytiva is well-positioned. That's my perspective.

Additionally, there is significant funding available. This means investments can be made to ensure any gaps can be filled. The volume of available money should not be overlooked.

Allow me to share my screen for a moment.

Yes, I'm familiar with that. I've seen it several times. I'm laughing because I've seen this picture in several board presentations during strategic meetings.

My question is, which part of this process do you think is the most challenging for competitors to enter and compete with Pall?

The removal filtration steps are the most difficult. Not the final filtration, but the steps before that. DNA removal and ultrafiltration chromatography require a lot of expertise.

Does Pall have expertise in these areas, or do they have filters in those chromatography columns?

They have chromatography expertise. It's not just about filters. Chromatography involves separating substances due to pore sizes or other factors.

So, you're referring to something like a resin?

Yes; it's resins, beads, and other similar materials.

I thought Cytiva had many of those. But you're saying Pall also has some?

Yes, that's correct. With its acquisition, Pall has become even more dominant. I think the final filtration is not as critical. As I said, final filtration is not simple, but it's not as critical.

The DNA removal is the most difficult part, you said?

Yes, I would say that DNA removal is a strong area of expertise. Cell separation also requires a certain level of expertise, depending on the type of cell separation you wish to perform. Ultrafiltration is another area of expertise.

If we were to consider the process where the majority of the money is spent, how would you break down the revenue percentage-wise? For instance, what percentage is attributed to DNA removal? Is it about 20%? And what about chromatography, is it 50%? Could you provide a rough estimate of the customer's spending distribution?

I can't provide exact figures, but chromatography likely constitutes one of the larger percentages. I would estimate that chromatography accounts for about 10% to 15%, virus filtration around 10%, ultrafiltration about 10%, and DNA removal also around 10%. Air venting might be around 15 to 3%. Cell separation could also be around 10%, with the remaining processes accounting for approximately 5% each. Hopefully, that adds up to 100%. Chromatography is slightly higher, with ultrafiltration and virus filtration potentially being the highest percentages. Final filtration is also a part of the process.

Why is chromatography the most expensive step?

Chromatography is a complex process. It's not as simple as just passing something smoothly through a membrane. You need to consider what you're trying to eliminate and what you're trying to retain. This process requires a significant investment in materials, which cannot be reused indefinitely.

Are you referring to the beads and resin used in the beading process?

Yes, they need to be cleaned, but after a certain point, they need to be replaced.

Is the process the same for antibody and cell therapy processes? Are all these steps necessary, or are there differences in the filtration processes?

There may be one or two steps that aren't necessary in one process or the other. So, you could potentially eliminate one or two steps.

Is chromatography still required in the cell therapy process?

Yes, I would say so.

If I'm a customer designing this process, would I typically source filters from one provider for the culture media filtration stage and then use a different provider for the separation or ultrafiltration stage? Or is it more common to use one filtration provider for the entire process?

Typically, customers don't source from a single provider. They usually have some level of expertise in one or more areas and would use at least one or two suppliers for the overall steps. For instance, they might use Pall for three to five stages and other suppliers for the remaining stages. It's not uncommon for customers to use up to three suppliers, but typically they use two.

While they might use two suppliers for the overall process, they would only specify one for each specific system?

That's correct.

You essentially have a mini monopoly at each of those stages because you're specified into that process.

Yes, that's correct.

When do you typically see things going wrong? When does Pall lose share or when does a customer switch out from a filter in this bioproduction process?

Usually, it happens when someone introduces a new technology. New technology implies something more efficient, with faster flow, better elimination of certain elements, or significantly cheaper options, such as half the price for a similar filtration step. Then Pall tends to lose some of its share. Additionally, there have been instances of material shortages, production biases. For example, there were issues with membrane production in Pensacola, where a specific membrane couldn't be produced for several months. Consequently, we lost the opportunity to supply such customers. Customers won't wait for you, so they'll spec in someone else.

How often, in your experience, have you seen customers switch out on the biotech side? Are there many examples?

It doesn't happen often enough to warrant reporting that we've lost an account again. It's typically rare because the focus is on ensuring that production in pharmaceutical filtration devices runs smoothly. There's a huge emphasis on ensuring smooth operation in terms of capacity and quality. However, there are occasional hiccups, and we do lose some business, but it's not a frequent occurrence. It's not like we lose an account every week for whatever reason. That was not the case when I was working there.

My last question is, what do you think is the biggest risk to Pall in the biotech process?

Honestly, I'm not sure. The question that I believe will arise is how they will organize the internal strategic approach of GE and Pall, now that they are together and servicing the same customer base. There is some overlap, and there might be some issues regarding how to service a customer properly in the future. The biggest risk might be becoming too complacent or arrogant, thinking that customers have to come to us, so let's wait until they do. However, from a technology perspective, I don't see a significant risk. They are in a good position now with Cytiva in the biopharma area. But when it comes to medical, it's a completely different story, as that area is still shrinking.

What does GE bring to Pall with this merger? What advantage, if any, do they have now?

Honestly, I'm not sure. Of course, there are some areas where Pall was not as good as GE from an equipment perspective. But from a membrane technology perspective, I see Pall as the leading part. I see it more as GE dominating the equipment and instrument side, while Pall leads in membrane technology.

When you combine them, do you sell them as one package, or do you still sell them separately? If so, can you discount the price to win more business? How do you see that playing out?

No, I don't think the strategy is to offer discounts. I believe the strategy is to expand the service. What you just demonstrated is that you now own everything, and there isn't a second supplier that isn't either GE or Pall. Essentially, you now own the entire process in terms of Cytiva. That's what they're trying to achieve.

You have one service team, one post-sale service team, is that correct?

If I were in their position, I wouldn't separate them.