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WIKI ANALYSIS
Pall Corporation is a company that manufactures filters for purification. You may also be looking for ETF ETFS Physical Palladium Shares (PALL)
Pall Corporation (NYSE: PLL) makes filters that are used to purify air water, blood and other fluids. The company's industrial customers use Pall's filters to reduce waste and pollutants that can be harmful to the environment. The company also sells filters to pharmaceutical companies and hospitals for the purification of drugs and to ensure sterile conditions. The company differentiates itself from competitors by working closely with clients to develop custom filtration products. Although this makes product development more expensive, PLL's custom products also result in higher switching costs for its customers. Moreover, many of Pall's products require filters that must be replaced periodically to remain functional, and the sale of these filters accounts for 75% of all sales. The company earned $2.3 billion in revenue and $196 million in net income in 2009.[1]
Pall has continued to benefit from the growth of the biotechnology and vaccine markets as the production of biopharmaceuticals and vaccines requires eight to ten times more filtration and separation than traditional pharmaceutical processes. In addition, Pall's products address many of the growing issues facing countries worldwide such as the need for clean water, managing pollution, and the disposal of hazardous waste. Manufacturing sensitive electronic components also requires ultra-pure fluids, and the growth of the sales of computers, cell phones, portable music players, etc. contribute to Pall's growth.
Company Overview
Pall's business is divided into Pall Life Sciences, which accounts for 40% of sales, and Pall Industrial, which accounts for 60% of sales.[2] According to Pall's own estimates, the annual overall market potential of the Life Sciences Market is $8 billion a year, and the annual market potential of the Industrial Market is $27 billion a year.
Industrial Division (60% of Revenue)
In the Industrial Division, sales are divided into General Industrial, which includes everything from the food and beverage market to water filtration to the energy sector, Aerospace and Transportation, and Microelectronics.[3]
Business Growth
FY 2009 (ended July 31, 2009)[1]
- Net sales fell 9.4% to $2.3 billion. The company attributes the decrease in sales to the weak economic environment, which caused sales in both of the company's to decline by 3.6% and 13% respectively.
- Net income fell 10% to $196 million.
Trends and Forces
Focus on Green Technologies Creates a Need for Pall's Products
The growing demand for green products provides opportunity for Pall. The company works closely with manufacturers to protect the environment by reducing emissions and minimizing waste. Their water and air filters ensure that harmful and unlawful pollutants do not reach the environment. Stricter U.S. Environmental Legislation and U.S. Energy Regulations will make it necessary for companies to use filtration products that are made by Pall. The company also works with petroleum refiners to maximize production and develop cleaner burning and alternative fuels, another important aspect of the green movement.
Biotechnology and Vaccine Markets Require Intensive Filtration Products
Pall is relying on the biotechnology and vaccine to fuel the growth of its Life Sciences Division in the coming years. These market require eight to ten times more filtration and separation intensive than classical pharmaceutical processes, and Pall is focused on developing products for this fast-growing market. Vaccine production is becoming increasingly important due to the dramatic increase in the number of yearly flu inoculations and the development of new cancer vaccines. Filtration products are needed both during the research phase and production phase of the drugs. Thus, if a successful drug is found, the production of such a product would greatly increase the need for Pall's life sciences products.
Rising Population Around the World Will Lead to Higher Demand For Water Filtration Products
Pall's products are used to help municipal and industrial customers address pressing water quality and scarcity issues. Governments around the world are implementing stringent new regulations governing drinking water standards as the need for clean water is a priority for many developing countries. Heavy pollution in areas have also created a need for intensive filtration of water before it is safe for consumption. Increasing government regulation of toxins and other harmful products that can be released from factories have forced industry to filter water before, during, and after use both to conserve it and to meet discharge requirements. All these needs create opportunities for Pall as the company has the capability to design and engineer fluid management systems to satisfy all their customers' needs. As a worldwide company, Pall also has the capabilities to take advantage of the growing water needs of both developed and developing countries.
Growth of Microelectronics Market Fuels Pall's Growth
Pall's filtration and purification devices are used in the production of many of today's sophisticated electronics such as in semiconductors, data storage devices, fiber optics, and advanced display devices. Integrated circuits, which are used in almost every electronic device on the market, require exceedingly high levels of filtration technologies. Pall itself predicts that it will be able to capitalize on the growing demand for gaming consoles, MP3 players, flat screen TV and monitors, multimedia cell phones, and ink jet printers and cartridges. Many of these technologies are still developing with high growth potential for the future. As firms manufacture more electronic products, Pall's filtration products will also be increasingly used.
Competition
While Pall competes with many companies in the Industrial and Life Sciences markets, few companies operate in both markets as Pall does. Since the two markets are distinct from each other, Pall's diversification makes it less reliant on any one sector.
- Millipore (MIL) - Once known solely for its filtration products, Millipore has expanded into being a life sciences research company providing equipment for laboratory research and the biopharmaceutical manufacturing business. However, although Millipore has been involved in biopharmaceutical manufacturing since the 1980s, the company has only began making significant inroads into the laboratory research market. Since the laboratory research market is five times larger than the biopharmaceutical manufacturing market, Millipore is investing heavily in the market both through research and development and acquisitions. Millipore still maintains a large catalog of water filtration devices as well as filtration devices for drug manufacturing that competes directly with Pall's Life Sciences Division. However, Millipore's filtration and purification devices are used solely for research and drug manufacturing purposes, and the company does not sell products in the Industrial Market.
- ESCO Technologies (ESE) - ESCO Technolgoies ia producer of engineered products for industrial and commercial applications such as digital surveillance products, utility meters, filtration products, and radio frequency shielding and testing. The company has a filtration division that PLL directly competes with.
- Danaher (DHR) - Danaher designs professional, medical, industrial, and consumer products and sells everything from microscopes to computer network analyzers. Their disinfection technologies help ensure safe drinking water and competes directly with Pall's water treatment products.
References
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