Good Q3 execution delivering strong organic growth
July – September
January – September
Message from the CEO
In the third quarter we continued to deliver strong organic growth of 12%. Our well-balanced product portfolio and solution focus gives us a highly competitive position to win in the markets we serve.
I want to start this briefing by expressing my gratitude to Torben Jørgensen for his leadership during the transition period and the solid results that were delivered.
My management mantra is to be at the point of impact of our business. Therefore, since joining, just over a month ago, I have been meeting our teams worldwide to listen and learn first-hand as well as visiting our customers to get their important perspectives. I have been impressed with what I have heard and seen and am excited about the opportunities ahead of us to build scale and accelerate growth through the further sharpening of our strategy and a relentless focus on operational excellence.
In the quarter we reported positive organic growth of 12%. Geographically, our largest and most important markets, the Americas and EMEA continued to show good momentum and growth. In APAC and in particular China, we are still seeing challenging headwinds. We have taken actions to adjust the cost base in China to better align the operational infrastructure with current market conditions.
In the quarter we delivered revenues of 490 MSEK, up 9%. For the first 9 months of the year, we delivered revenues of 1,474 MSEK, up 21% with recurring revenues at 72% in the quarter and year to date.
Organic growth in Drug Discovery and Development, which represents approximately two thirds of our business, was 16% ahead in the quarter and 4% ahead for the first 9 months of the year. Although Small Molecules saw negative growth in the quarter, the decline narrowed considerably from the previous quarter. We are working at pace with our supply partner to resolve previously reported production capacity constraints for our peptide systems. While we are gradually seeing a sequential quarter-on-quarter increase in production capacity, there is still work to be done to match the supply with the current level of demand, and this in turn is impacting our reported growth.
In Large Molecules, we saw continued attractive organic growth of 65% in the quarter and 60% in the first 9 months.
In Analytical and Diagnostic Testing, which represents approximately one third of our business, organic growth in the quarter was 5% and 14% for the first 9 months of the year, which is very pleasing to report.
Our gross margins at 63% year to date are robust and ahead of last year. In the quarter, which is traditionally quieter, we did see some transitory changes in product and customer mix. Importantly, we continued to control our operating costs to deliver attractive adjusted EBITDA.
In the quarter and year to date we continued invest in our operational facilities to increase manufacturing capacity to enable future growth. In the Isle of Man, additional capacity will come on stream in the fourth quarter. In Boston, US, our new facility has cleanrooms so we can more fully exploit the column packing market, as well as warehousing for rapid delivery of products to our customers.
Additionally, our continued investment in research and development underpins our steady stream of product launches and cements our reputation for thought and innovation leadership in the markets we operate in. Our recent launches of PeptiPec-96 for peptide purification and the Selekt ELSD that detects compounds that lack chromophores are two examples of Biotage bringing to market workflow solutions addressing customers problems.
Biotage is now able to capture opportunities across multiple modalities.
Our Drug Discovery & Development - Small Molecules and Analytical and Diagnostic Testing businesses deliver predictable revenue streams, industry leading gross margins, and solid adjusted EBITDA and cash generation.
Our Drug Discovery & Development - Large Molecules business gives us access to the higher growth bioprocessing market and the ability to generate superior revenue growth and attractive margins. Coupled with our expansive modality offering, an enviable broad suite of innovative ‘must have’ solutions and balanced geographical profile, give us an attractive competitive offering.
Biotage is fortunate to have a highly skilled, creative and enthusiastic workforce. Their energy, commitment and can-do attitude continues to make Biotage the successful company it is today, and it gives me confidence, in this my first report, that as we look to the future, we can continue to deliver attractive growth, benefiting all our stakeholders.
Uppsala, October 23, 2024
Frederic Vanderhaegen
CEO and President