BIOMERIEUX (BIM-FR)

TOP CONTRIBUTORS

William Raasch

Alan Ibrahim

BioMérieux (EPA: BIM) is a French company that produces in vitro diagnostics for infectious diseases, cardiovascular emergencies, and cancer. Over half of revenues come from sales of tests used to identify and prescribe defenses against bacteria and other microbiological organisms. BioMérieux is the largest seller of microbiology tests, is a top 10 provider of immunoassay tests, and has growing segments in tests for industrial applications and molecular biology (including DNA and RNA) tests.

The microbiology market, in which bioMérieux holds a 36.4% market share (of $1.85 billion), is a relatively mature market with expected growth rates of only around 3-6% annually. bioMérieux management has stated it intends to increase its presence in higher-growth areas such as molecular biology, clinical tests, and theranostics (individually-tailored treatment).

BioMérieux has an active business development department, and has made dozens of acquisitions and collaborations. While bioMérieux's strong presence in microbiology and immunoassays have brought in steady revenue, growth in its emergent theranostic and molecular biology segments are important for bioMérieux's long-term outlook.

Company Overview

Major Product Segments

Microbiology (52% of sales)

The microbiology segment of bioMérieux consist of products that help laboratories diagnose and develop treatments for infectious diseases through tests on blood, urine, and tissue samples from patients.

The BacT/ALERT 3D system tests for the presence of disease-causing organisms in the blood of patients.^[1]

The VITEK 2 system provides testing of infected patients for susceptibility of the invading bacteria to antibiotic treatments. By testing this, physicians can avoid creating resistant bacteria through treatment with antibiotics with less-than-ideal effectiveness.^[2]

BioMérieux's ChromeID system provides a range of culture media with which to transport patient specimens for testing.^[3]

Immunoassays (28% of sales)

Immunoassays use detectable antibodies that specifically bind to and detect the presence of bacteria and other disease-causing agents in patient specimens. BioMérieux develops high-performance immunoanalyzers for laboratory testing as well as quick and portable tests for rapid testing at the point-of-care.

BioMérieux's VIDAS system is a fully automatic immunoanalyzer that can test patient specimens for 85 different pathogens, including HIV, Hepatitis, ToRC, and D-dimer. The VIDAS systems provide high-throughput testing services for laboratories in hospitals. BioMérieux has also developed the miniVIDAS, which can be used in smaller emergency settings.^[4]

BioMérieux's DAVINCI QUATTRO screening system provides high volume screening for 8 common infectious diseases: HIV, Hepatitis B, Hepatitis C*, CMV, HTLV, Syphilis, Chagas and EBV.^[5]

Rapid diagnostic immunoassays are small hand-held disposable tests that give quick and reliable test results, albeit with less sophistication than larger lab tests. To service this market bioMérieux has developed the QUICKVUE and VIKIA tests. These tests are capable of giving test results in less than an hour for common diseases such as influenza, HIV, and strep.^[6]

Industrial Applications (15% of sales)

BioMérieux develops several products to address the industrial testing market segment. This segment includes Food Safety Testing, which involves testing new food products for contamination, and Pharmaceutical Quality Testing, which involves testing pharmaceutical manufacturing facilities for contamination sources.

For food safety, BioMérieux offers the DiversiLab™ system, for testing microorganisms, such as Salmonella, MiniBags culture media that provide a greater degree of safety when they are used in industrial microbiology laboratories, and the chromID™ Sakazakii culture medium for the detection of bacterium present in infant milk powder.

In pharmaceutical quality, BioMérieux offers the DiversiLab™ system for identifying potential contamination sources in pharmaceutical production facilities, the TSA 3P™ Pack +, a culture media, used for air quality monitoring in manufacturing facilities, the Count-Tact™ 3P™ Pack +, culture media to monitor surface quality, and the QUANTISWAB™ by Copan, used to perform quantitative environmental control in pharmaceutical manufacturing facilities.

Molecular Diagnostics (5% of sales)

Molecular diagnostics uses the concept of nucleic acid (i.e. DNA or RNA) amplification and detection to diagnose the presence of foreign organisms or genetic mutations. In this segment, bioMérieux has developed the NucliSENS testing kit.^[7]

Business Growth

FY 2009^[8]

• Net sales increased by 10.4% at constant exchange rates.
• Operating margin increased to 17.4% of net sales.

Trends and Forces

Diagnostics transitioning from laboratory to clincal tests

BioMérieux's management has stated that it intends to change its focus from laboratory-oriented tests to those designed for point-of-care use by clinicians. Such a move involves marketing products to physicians rather than laboratory technicians and developing products that suit different needs. Whereas laboratory tests focus more on high precision testing for high initial costs, point-of-care tests focus more on speed and portability for lower initial costs.^[9] BioMérieux's ability to make the transition from laboratory tests to clinical tests affects its ability to fulfill its own strategic plan and grow in the future.

BioMérieux's aims to expand in international markets

One of the ways in which bioMérieux plans to achieve growth is through expansion and optimization of its sales force overseas. BioMérieux created a Global Commercial Operations Department to facilitate this expansion and has selected the United States and Japan as target markets outside of Europe through which it may expand. BioMérieux's ability to reach these markets and grab market share from incumbent players impacts its growth.

The rise of Personalized Medicine in health care affects bioMérieux's theranostics division

Pharmacogenomics is the study of how genetic codes, or markers, in the DNA of a patient correspond to the efficacy and toxicity of potential therapeutics. Personalized medicine is the use of pharmacogenomics to guide prescription, and even development of such therapeutics. Analysts predict that personalized medicine will become a part of mainstream practice in medical care within 10 years.^[10]

As personalized medicine becomes a standard practice in the medical community, physicians will need genetic analyzers, such as those that bioMérieux develops in its molecular testing division, to make prescribing decisions. In addition, BioMérieux's theranostics division focuses on creating tests for personalizing cancer medicines to individual patients. The extent to which personalized medicine becomes prevalent in medical use affects the success of bioMérieux's higher growth areas - molecular testing and theranostics.

The success of the bioMérieux's recent collaborations and acquisitions will impact its valuation

BioMérieux has an active business development strategy. In the microbiology segment, bioMérieux acquired Biomedics, a bacteria culture manufacturer,^[11] and signed partnerships with Sysmex, Eiken, and Labtech Systems. In molecular biology, bioMérieux signed deals with AdvanDx and Cepheid (CPHD) for the commercialization of diagnostic tests for sepsis. For its industrial testing segment, bioMérieux acquired BTF and signed an agreement with Copan to distribute a pharmaceutical testing device.^[12]

bioMérieux acquired bioTheranostics (formerly AviaraDx), a molecular cancer profiling company, for $60 million.^[13] BioTheranostics develops diagnostic tests to classify cancers and help physicians provide medications that are personalized for individual patients.^[14] BioTheranostics currently operates at a loss ($8 million EBIT), and bioMérieux doesn't expect the acquisition to benefit its income until after 2012. In addition, BioMérieux intends to make more acquisitions in the U.S. and Asia in 2009. Stephane Bancel, Chief Executive Officer of the company said: “We are in talks with numerous parties.”^[15]

The ability of bioMérieux to integrate its acquisitions and collaborations into its infrastructure impacts bioMérieux's bottom line and future success.

Competition

BioMérieux competes with several companies in the diagnostics market, including Roche Pharmaceuticals (RHHBY), Abbott Laboratories (ABT), Becton, Dickinson and Company (BDX), JOHNSON & JOHNSON (JNJ) and Beckman Coulter (BEC).

References

1. ↑ BioMérieux - BacT/ALERT 3D
2. ↑ BioMérieux - VITEK 2
3. ↑ BioMérieux - ChromeID
4. ↑ BioMérieux - VIDAS
5. ↑ BioMérieux - DAVINCI QUATTRO
6. ↑ BioMérieux - Rapid Tests
7. ↑ BioMérieux - Molecular Diagnostics
8. ↑ Biomerieux 2009 Annual Report
9. ↑ BNET: Point-of-care testing versus central lab costs
10. ↑ Personalized Medicine: The Emerging Pharmacogenomics Revolution. PriceWaterhouseCoopers. Feb 2005.
11. ↑ bioMérieux Press Release
12. ↑ bioMérieux Press Release
13. ↑ Reuters: BioMérieux buys AviaraDx for $60 million
14. ↑ bioTheranostics - Homepage
15. ↑ Business Week Company Snapshot: BioMérieux