Sartorius AG

Thank you. Good day and welcome everybody to our today's conference call on the half years results for 2018.

I would like to walk you through the results for the Sartorius Group for the first six months together with our Rainer Lehmann. And then after that, I will present to you the results for the Sartorius Stedim Biotech for the first half of this year and after that we will have time for Q&A So, let me just kick off before I hand over to Rainer with highlighting the key results of the first six months of this year.

We have achieved double-digit growth in sales and order intake for the group and also in both divisions. In Bioprocess, particularly we have seen a nice dynamic quite a bit ahead of our expectation when you take the timing into account of a different quarters of last year.

We have seen a performance in line with our expectations in LPS and overall, we have been able to achieve an increase of our profit margin despite quite some headwinds from currencies. And as a result, from the positive trend ahead of our expectations in BPS, we have upgraded our sales guidance bit for about process and therefore also for the group.

And now, Rainer will talk you through the results in more details.

Thanks, Joachim. Also welcome from my side.

Before I dive into the figures, quick actually statements regarding our previous year figures. We had to restate H1 figures of 2017, due to the finalization of the purchase price allocation in conjunction with the acquisitions we did last year, Essen BioScience as well as Umetrics completes normal procedure like company has 12 months’ time to finalize the purchase price allocation.

We did saw in time and the effect basically on revenue was an adjustment downwards by $1.7 million, and it was an EBITDA impact of 0.2 percentage points lower. So, if in this presentation you're already of course see the restated figures.

So, I just want to make sure when you look into your previous year figures that you have these updated ones. So, let's look at the sales revenue 12% in constant currencies growth to $758 million.

As you see here, we already have some headwind of four percentage points from FX and actual rates growth was 8%. Also, very nice order intake development with 12.7% growth in constant currencies.

And as we always point out, the sales or the order funnel is nicely filled with 50 million order intakes above the half year sales revenue. We also were able to improve our underlying EBITDA to almost 190 million by 9.6% and which translates to an improvement in profitability from 24.6 percentage points last year to 25% this year.

And the underlying EPS increased by 14% to €1.16 for the ordinary and the €1.17 for the preferred shares. Overall, also I'm going to point out that the acquisition contributed roughly two percentage points of non-organic sales growth.

If we now go to the regional development, we see -- I want to start with the Americas, very nice performance 16.6% as you Joachim pointed out in the highlights, very strong momentum in the U.S. but let's also keep in mind that we had lowered our moderate comparable in that region.

The LTS growth of course were fueled by the Essen acquisition, very happy with the development there. In EMEA region, we have to say very solid performance by the bioprocess solution division and a little bit let's say weaker performance on the laboratory side which was 3 percentage points growth.

Asia-Pacific continue nice growth story both divisions really double-digit growth rates and was very nice year against very high comparable. If you look back to 2017, H1 we already showed there 35% growth.

And now on top of that we actually have 12% growth so that's really a nice development in that region and by both divisions. If we come now to the Bioprocess solutions performance.

Order intake, strong development 12.6% in constant currencies, really driven -- it's nice to see by also single used product, but as well as equipment projects on the order intake side. Sales growth of roughly 12% in constant currencies really also driven by a tick up of our sales culture media business remember that last year, we had start a faced there the trouble towards the end of H1 and it was all partner [indiscernible] this so far has been resulted the majority which are the drivers of this business, so we see a nice development here ticking up.

In addition of our filtration back business contributed both with double-digit growth on the sale side. The Umetrics acquisition contributed roughly one percentage points of non-organic sales growth and the underlying EBITDA of the division we're able to increase by 0.6 percentage points from 27.4% to 28% despite some headwind from the FX side.

If we then move to the LTS. Here we see order intake of 13.1% in constant currencies and sales revenues of 12%.

Of course, the Americas plays a major role here. It was roughly 21% revenue growth over previous year, and also nice development in Asia-Pacific with 20%.

Essen of course also driving the American performance roughly contributing five percentage points overall as non-organic sales growth. The EBITDA margin is on previous year level at 17.1%.

This is due to the fact that the economies of scale that we have there really were leveled out by the unfavorable FX headwinds. If we now move down to the next slide, if we come to the -- some key indicators starting with the underlying EBITDA, which I mentioned is 9.6%.

Financial results, I also want to point out this has been adjusted due as part of the purchase price allocation, it used to be 0.9 now, it's 14 points now. So of course, defense [ph] results without purchase price allocation would have been varying a bit more interest, which makes absolute sense due to the financing of the acquisition that we have going on.

Nice development on the underlying net profit, 14% increase to almost €80 million and our net profit of €67 million. Cash flow, strong improvement to €92 million, most of it then used for investing activities, our net investing cash flow at €97.4 million, which translates then on the CapEx side to 13.2% investment ratio, remember Q1 we had roughly 10% and we are projecting for year-end to have roughly 16%.

So, it is pretty much in line with our expectations. On the key financial indicators on the next slide, we see the very slow, very strong and robust equity ratio of 35%.

We see a slight increase in the net debt, which is expected. Of course, one big driver is the payment of our dividend in Q2, as well as we had some stronger investments in Q2 that you see also from the CapEx ratio just mentioned before and another factor contributed to it was some higher tax payments, prepayments that we had to do in some of the German entities.

And net debt to underlying EBITDA at 2.6, so really at a healthy level that we see is driving more towards year-end more to 2.5. And with that, I’ll hand over to Joachim for the outlook.

Thank you, Rainer. Yeah, as already indicated at the beginning of our presentation here today, we have raised our guidance for the Bioprocess division for the group, whereas we have confirmed the outlook for our LPS.

You will see all the details about this. Let me start to walk you through this table starting from the bottom.

So, for our LPS, we confirmed a sales growth for the full year of between 12% to 15% in constant currencies and an increase of our underlying EBITDA margin by 1 percentage point in comparison to the 18.0% that we have achieved for the full year of 2017. There is no change in regard to the composition of this growth.

We still expect 2.5 percentage points of non-organic growth following the Essen acquisition at the beginning of last year. For Bioprocess, we so far have expected 8% to 11% of sales revenue growth, we now expect 12% to 15% in constant currency.

This is quite a significant step-up. As you have heard before, we have achieved 13% of increase in regard to the order intake and 12% for sales revenue growth.

This is a figure above our expectation for the first half of the year. Keep in mind that particularly Q3 last year was relatively weak because of the negative impact not only from the inability of Lonza to deliver media at that time to U.S.

customers, but also because of the hurricane that has hit Puerto Rico and stopped deliveries from that facility for a couple of weeks, but also because of the low order level that we have seen a few key accounts during that time last year. So, in other words, comps for Q3 in particular, but therefore also for H2 will be relatively low.

So, we expect this quite a bit higher sales revenue growth for this year now. We confirmed the increase of our underlying EBITDA margin by 0.5 percentage point on top of the 28.0% that we have achieved for 2017.

Here we do expect a slight movement of our product mix towards equipment for the second half of the year. It’s nothing significant, but in comparison to the strong increase of business in consumables for the first half of the year, we still expect a significant increase of that business for the second half of the year, but an even stronger increase in relation to that of our equipment business and that’s why we confirmed the margin step-up.

For the Sartorius Group, this adds up to also sales revenue growth expectation of 12% to 15% and an increase of our underlying EBITDA margin by approximately 0.5 percentage point. We confirmed the outlook for our CapEx ratio to be at around 15%.

And we also confirmed what we have said earlier this year that as a result from the U.S. tax reform, the tax rate for the group is expected to be two percentage points below the level that we have seen for the years before and should be around 27% from this year onwards.

I would now like to immediately continue and walk you through the Sartorius Stedim Biotech Group's results, which as always are to a large extent identical to those of the bioprocess divisions, just some slight differences because of the Intragroup business met Sartorius Stedim Biotech has with the LPS division. But of course, the key drivers are absolutely identical to those of the Bioprocess division that Rainer has mentioned just before.

So, we have seen an increase of our sales revenues by 11.1% in constant currencies and an increase of our order intake by 11.8%. So, in the nutshell the same figures than those that we have heard before but just one percentage point lower as expected.

We also see a nice buildup of our order book here. We also see an expansion of our EBITDA margin in this case by one percentage point actually because of a little bit higher depreciation level following one aspect that I will mention in a minute.

So, we've achieved 27.8% here for the first half of the year. And also, a nice increase of our earnings per share, we have reached €1.12 now which is an increase by 6.5 percentage points approximately.

Again, the growth that we have achieved here distributes quite nicely across all regions with Americas following a relatively weak first half of last year. As we already have talked about leading with 15% approximately EMEA at 9 as well as Asia-Pacific following very strong first half of last year.

The operating cash flow for Sartorius Stedim Biotech also shows a very strong set of figures I believe. Most comments have been made before.

Of course, the key driver are the higher earnings here. The net investing cash flow reflects on one hand our very significant CapEx program.

We add capacities in Puerto Rico as well as in -- our main sites foreseeing a use product. We also have expanded our France operations for our backs as well, so quite busy on that front.

Acquisitions have been in this -- not in this figure in regards in comparison to last year where we have acquired Umetrics in the first half of the year. There is one special item that has led to a peak to our SSB CapEx and that is that SSB has a little bit earlier than we initially planned for acquired software related assets particularly for the ERP system after the completion of the biggest chunk of our ERP rollout program.

So that SSB now owns the key elements of this ERP system by itself and doesn't buy those services every month actually and that has led also to the shift of depreciation versus cost that I was talking about. We did expect that to take place later or we initially planned to do this later this year and we have now executed that in the course of Q2 already.

So therefore, and you will see that in a minute we confirmed our guidance for the CapEx for the full year as this has been the onetime element during H1 only. The financial position remains very strong for SSB with the very healthy equity ratio as well as a very low net debt to underlying EBITDA.

If you can read from the stable leads a lot of firepower for potential non-organic growth initiatives for sure. And then finally, I would like to close this part of our presentation by walk you briefly through the guidance for the full year of 2018.

And pretty much as I have mentioned before for our process division we upgrade our sales revenue growth expectation quite substantially to 11% to 14% because of the dynamics and the comments that I was talking about before. We basically confirmed also our EBITDA margin guidance with the exception to this timing effect of the depreciation shift.

Therefore, we now expect 28% here following 27.3% for the year earlier and we confirmed the CapEx ratio to be at 15% as this special effect has been rather timing effect than anything else. So, and again, also in regard to the tax, we expect a level here going forward that is two percentage points lower than before and should be a 26% for the full year of 2018 already.

Thank you very much so far for listening. And now we would open the lines for Q&A.

Hi, and thanks for taking my questions. So, my first would be on the LPS division.

In order to reach low-end of the sales guidance organic growth needs to accelerate to low double-digit territory in H2. However, order intake was only 2% in Q2, which does not bode well for Q3 organic sales growth.

So, what gives you the confidence to see skyrocketing sales in Q4 this year in the LPS division? My second question would be on Asia Pacific and BPS.

It seems that sales growth here was rather flattish year-on-year in Q2, is there any particular reason for the slowdown besides the higher comparison base? Thank you.

So, for LPS, you are right. The second quarter has shown a little bit lower growth for the LPS division only.

We monitor of course the pipeline very closely that we have. We therefore, I mean this is pretty much I guess a comment that we make more often.

We wouldn’t recommend to overemphasize single quarters here. We, as I said, we monitor our pipeline.

We do expect a significant pick-up of our growth rate for the second half of the year that is what I would say. There is nothing like spectacular change or any particular product range behind this expectation.

Of course, the proportion of the bioanalytics business is increasing as this business is growing around 30%. And the weight of this business is of course is increasing to some extent quarter-by-quarter, but we also expect healthy growth rates from the other business segments, product segments for the second half of the year.

So, I guess the key message is let’s not overemphasize single quarters. For Asia, it’s exactly as you say, it’s basically the comps.

But more to say about that, we are satisfied with the development in Asia. We particularly see very healthy organic growth in both divisions.

And therefore, we -- yeah, it’s really the tough comps that play a role here.

Okay. Thank you.

And if I may ask a quick follow-up question with regard to Asia given that you are growing quite nicely there. How likely is it that you will need to invest in local capacities, in particular in China in the next year or thereafter?

Thanks.

That’s indeed a very good and important aspect. We are looking into this matter very closely from different angles.

And we believe there are two aspects to it. One is the increasing size and we believe for quite a number of years to come still very dynamic market developments to be expected.

So, the sheer size of this market will play a role here. The second one is that I believe we have to expect at some point in time that the Chinese government will expect and demand a higher level of local content.

We do have a manufacturing site in Beijing where we produce a limited part of our product portfolio for both divisions. And we are set up for expanding these activities step-by-step.

And we might also consider a more significant expansion there at some point in time. And we don't have any specific plans we're doing so but we are monitoring that very closely and will take the necessary actions when necessary.

And again, I think the key message is it's on our radar screen, we have all let's say tools in our toolbox to become more active here whenever necessary.

Okay, very clear. Thank you very much.

Good morning, and thanks for taking the question. Can you - going on with the geographic expansion.

Are you seeing more strength in the North American market or is it more in the U.S.? I know you wanted to be more in this North American opportunity and could you talk about are you getting some additional share in the U.S.

specifically on geography? Thank you.

Yeah. I think the aspect of gaining market shares in the U.S.

and therefore also in North America in general is on our agenda for a couple of years already and I guess it will remain on our agenda for a couple of more years. And very simply because of the fact that in particular and in the bioprocess business we are, these are markets that are not moving that quickly as we are talking about value data processes.

And when we talk about gaining market share, this very much relates to gaining higher share of new business in comparison to the share that we have with existing business. And that of course takes time, but the good news is there is we do have an outlook to continue growing faster than the market for a couple of more years as we have done for more than five years now already.

And the back on for having a lower market share in the U.S. than in Europe for instance, and also in most markets of Asia is that our main competitors are U.S.

based companies and at that point in time where Sartorius decided to focus on the biopharmaceutical market in particular the big biopharmaceutical companies at that time like Amgen for instance of Genentech already had chosen our competitors as their main suppliers. And we are gaining share also in these key accounts step-by-back, but again this will remain on our agenda for sure for a couple of more years and we are very optimistic to rather continue to be gaining share here.

Another item or topic coming from this is that, we typically don't have much business to lose once a product that initially have been approved by the FDA become subject of biosimilar producers that we then can't lose much share, much business whereas we typically win the substantial portion of this biosimilar business. that then often doesn't occur in the U.S., but I think it's something that is related to this particular situation in the U.S.

Let me add that a little bit following the question that has been asked before that of course Asia and in particular China is very much on our growth agenda as well. Less so because of the potential for gaining market share, I mean we are always driving for gaining market share wherever we can, but much more because of the market growth as such.

And that multiplied by the size of that particular market of course is tremendous in China. So, if we had to put two markets on top of our list where we focused on to get things done, then of course this will be U.S.

and China.

Thank you very much.

Actually it's -- congratulations on the results. Firstly, I'll be really interested to hear how you're now thinking about your 2020 guidance following the upgraded sales guidance this year.

Also, quick one on -- just wondering how much countries the number this quarter and what you're expecting for 2018. And in addition, in Bioprocess in terms of your guidance compared to pick up towards the end of the year, but your order great looks slightly low for Q2.

So, I'll be interesting to hearing your thoughts on that. Thank you very much.

In regard to 2020 guidance, we see ourselves be well on track. As we always have pointed out that also on our path towards the -- towards 2020 as also when beyond that towards 2025, we of course always expect acquisitions to play a certain role.

Even though one has to say that with the organic growth that we are achieving at the moment, we would get close to the target maybe even without larger acquisitions. But again, we definitely believe that in 2020, acquisitions may play a role.

And we also see ourselves very well on track not only in regard to top-line but also in regard to profitability achievements. Cell culture [ph] media, here we are also a little bit ahead of our initial expectations.

We always said after we have to except losing some business here in the course of last year. We have been cautious in regard to our growth expectations for this year not because of the availability of the product as such.

This is recovering as we have talked about earlier, but of course we rather expect as how quickly we can win business back from customers. We have seen very, very solid double-digit growth during the first six months now.

And we expect the business to be quite a bit north of €50 million for the full year of 2018. And therefore, we should be around the 2016 levels again that we have seen before the progress in 2017.

And then for LPS, I think you mentioned bioanalytics in particular. This is a business where orders are turned into sales revenues very quickly as the product of both as Essen and [indiscernible] standard product.

Those customer related configurations are basically software based, so it can be realized very, very quickly. And therefore, as said before the order book which is indeed not that big, it doesn't have a big impact on our guidance and our internal forecast.

Much more important is to the funnel that we are working on and that is one that looks very healthy and that is what where we based our guidance on.

Great. Thank you very much.

Hi, thanks for taking my questions. And two on the process solutions business if I may.

The first one on the order intake in the second quarter. You mentioned I think in the press release this is also driven by equipment orders.

Are we talking about new products here and expansion of existing contracts with customers in North America that would be helpful to know if you can shed a bit more color here? And in general, the recovery you’re observing that should also continue during the calls of 2018 in light of your updated guidance?

And is there any kind of inventory restocking in there coming from customers, you experienced the opposite effect in 2017? Thank you.

Gian, thank you for these questions. So, for the order intake of Q2 and the equipment portion in here, we do have equipment business and also this has been the case in Q2 indeed to some extent with new customers, particularly then in North America indeed and in Asia, but of course also with existing customers.

And very often this equipment orders are related to new products one way or the other of our customers indeed. So, that indeed is the case.

Maybe there is a certain tendency that in Asia equipment orders are coming from biosimilar producers or future biosimilar producers. And in North America the proportion of originators is maybe a little bit higher.

But that is the reason why we mentioned that is not that there is one -- that there are one or two spectacular equipment orders in there, it’s a very healthy mix and distribution here. The point is that we also wanted to make you aware that there will be a certain and slight, but yet a relevant shift in product mix most likely for the second half of the year also to set the expectations right in regard to the margin for the second half of the year.

So, nothing spectacular, very healthy, also a very positive expectation in regard to single-use business for the second half of the year. So, restocking, I mean that’s a good point indeed.

And unfortunately, we always would repeat the comment that we don’t have that deep insight into the stock levels of our customers. I think nobody basically has such deep insight.

To the best knowledge that we have, restocking in the sense of one-time orders to fill up stock levels or so is nothing where we would have an indication for. Can we completely exclude this playing a certain role?

Probably no, but we believe as I guess we always would comment on this, we always rather recommend to take a longer-term approach to analyzing our figures. Let’s not put too much emphasis on one or two quarters, but let’s see the line that goes through it.

And I think if we talk about three years, four years or so, which I think is the right approach to our business anyways then you see a very robust, very significant growth rate underlying all this.

All right. Thank you very much.

Yes, good afternoon. Thanks for taking my question.

It relates to Sartorius Stedim Biotech. I just wanted to have some explanation regarding the difference of drop through between Q1 and Q2.

Drop through is let’s say from revenue to EBITDA was around 15% in first quarter and around 50% in second quarter. Could you elaborate a bit on that please?

Patrick, could you repeat which key figure are you talking about?

I am talking about EBITDA improvement divided by revenue improvement, which is I think around 15% in Q1 and 50% in Q2 for SSB. So, is it coming from mixed product mix or just the fact that EBITDA you are on?

Yeah, indeed, actually the -- you are absolutely right, the increase has been more substantial in the second quarter. Second quarter has been a bit stronger in regard to top-line growth and indeed mix has been a little bit more towards the single use product.

And it's the mix product mix. These are the two key drivers and that is also the context again why we are addressing the mix for the second half of the year.

no doubt very healthy, but this slight shift between single use and equipment have some impact on the EBITDA margin step up indeed. So therefore, indeed Q2 has been particularly strong in that regard because of this healthy top-line growth in conjunction with the mix.

And then what you mean during H2 there is product mix will be also bit more in favor of single use versus equipment?

No, the second half in the second half of the year, we will see strong growth of the equipment business again, whereas that has been bit strong in Q2.

Okay, understood. Thank you very much for this answer.

Welcome.

Yeah thanks very much for taking my questions. And first question please on just on the lab products and service division.

And I think historically all sources given very consistent and prudent and so I just wonder whether you think at this point given the relatively softer development in LPS, whether it's a prudent assumption to assume you end up at the lower end of the range rather than the upper end. If it towards at the upper end would require a very significant acceleration in the second half of the year, which may be somewhat difficult to predict even the capital nature of the Essen business.

So, I just wonder if you can share some thoughts there. And following on from that, seems that there is some quite margin improvement required to get to a 100 basis points for the full year.

So again, it is something that you can achieve at the lower end of the guidance range. and all do you need the upper end of guidance range to fulfill the objective, that's the first question please.

Yeah, sure. So, I guess if we would expect to reach just around the lower end, we would have considered to probably change our guidance a little bit.

So, we do expect that, or we would say that the guidance very much describes well the range where we think to land in. And I would also make the comment that I mean that's always the case when you have the range for the top-line, but just give an approximate margin guidance that than this approx.

margin guidance maybe relates best to the midpoint of the guidance approximately, that with all those sectors that may take -- like mix et cetera. And we indeed have confirmed our margin guidance.

Maybe that narrows this a little bit down to how we think about that. Nevertheless of course, as you asked rightly what about the margin improvement, which is significant that we are expecting here for the second half of the year.

Well that does have a background very much in the mix as I guess I mentioned before. The second half of the year should be significantly stronger for the bioanalytics business as pretty much to be expected given the fact that this business is growing around 30% on a yearly basis.

Then of course basically it grows quarter-by-quarter. and therefore, and the rate and influence on the margin of this business increases overtime and this business has a very healthy EBITDA margin contribution.

So again, I please accept that I can answer the guidance question only by describing this space a little bit, and then the mechanism for the margin I hope was clear.

Thank you. And just to follow up on that point.

I guess you've had now a reasonable on that experience concerning -- which continues to be the principle growth driver if you like of the division. And then some of the different business mix if you like to your previous lab products and service business.

So, I wonder if you could just share some thoughts historically speaking as to whether the leads that you have been expecting always materialized in business or whether as you identified before that you should really consider these are not longer-term trends, these will come due to some point. So, just the confidence levels around the leads, what’s your historic experience being in that regard?

I would say the ability of our sales force to generate business based on the leads that we get is quite significant. The product is an outstanding product given the fact that there is also no direct competition and it helps our customers significantly to improve the productivity of their research processes.

So, that is pretty much in line with our expectation. However, particularly when it comes to academic customers, as you can imagine, they very often are restricted in regard to the budget and the good portion of the customers here are academic, institutions.

So, when I say that the hit rate is in line with our expectations and that definitely doesn’t mean that this is 100% or anything close to that, but we would say this is an -- it’s a healthy hit rate. Of course, as always, you would like to be even better in regard to lead qualification to improve the hit rate then furthermore, but basically this is in line with our expectation and on a healthy level.

Very good. Thanks.

Very clear. And just lastly then and just to come back to or expand upon Daniel’s question about restocking.

I think there is some evidence that the whole industry is enjoying pretty buoyant bio prices growth at the moment accelerating from the prior year. And I think you mentioned before that you can’t be entirely sure that there is not some restocking effects here.

But just to understand further, is there any noticeable dynamics with respect to product approvals or biosimilar entry or a stronger vaccine season or anything of this nature that you believe could be underpinning an industry-wide resurgence? Thanks.

Yeah. I would say most of the dynamics in our industry are of longer term nature.

And I wouldn’t see any specific driver here of those that you have mentioned. Basically, all are positive drivers all into play healthy at the moment, but there is not the one driver that I would like to highlight here as an explanation for the healthy growth that we see at the moment, it’s a mix of all these trends.

Thanks very much, Joachim. I appreciate it.

Sorry. I was muted.

Thank you for taking my follow-up question, and it’s actually on China. Do you see or expect any benefits from the political tensions between the U.S.

and China given that some of your major competitors are U.S. based companies?

And my second question would be actually on ViraCyte [ph], it’s roughly two years since you acquired this business and I know it was a small acquisition, but the technology actually sounded quite interesting. So, I just wanted to check whether this acquisition has lived up to your expectations and are these ViraCyte products actually a part of your bioanalytics portfolio then?

Thank you.

Yeah. Thank you for these two questions.

I would absolutely hesitate to expect any positive influences from the World Trade issues that we see with tariffs coming up in different product segments at the moment. I do not expect any positive influences on our business here.

In turn, so far, we also don’t see any negative influences, but also, I wouldn't expect any positive ones at this point in time. On ViraCyte, ViraCyte actually we have now integrated into the bioprocess offering as we see stronger synergies here indeed particularly when it is about quality assurance procedures, business is roughly in line with our expectations.

We indeed see that quite additional investments have been necessary to integrate this product sufficiently into our offering and to meet our customers' expectations. But we basically still see this being a positive addition to our portfolio.

Okay. Thank you for these insights.

Yeah, good afternoon. I was just wondering if you could remind us what is your edge that basically helps you winning market share in the U.S.?

So, one aspect is first of all to set the perspective right. I would always prefer to look on it in a way of saying we want to win and we do win by now approximately the shape the same share of new business in the U.S.

as we do in Europe and in Asia. So, I think that's an important aspect and perspective to take, because this is the effect of what we are doing.

And in the past, we won less smaller share of new business in the U.S. than in other regions.

So, I think that is a that's not just the shift of how to look on it but it's substantial. Because the reason why we were winning less business in the U.S.

than in Europe for instance has been of course not our product offering, because the product offering is the same across all regions, but we have been less present in the market. we have less application specialists for instance located very closely at our customer site.

And therefore, couple of years back, we have started to substantially invest into our presence there and having more product specialists for instance being very close to the customers and making demos et cetera, et cetera. So, I think that has been very important to not only in terms of the product portfolio but also stronger sales force being available there.

But then of course it's of course also but not only then for the U.S. question of the product portfolio.

And we believe that we have the broadest product portfolio in the market, we have for sure leaders in upstream, but we also have a very strong and compelling offering in the downstream arena. The acquisitions that we have made are all basically very complementary innovative technologies partially technologies with the very strong differentiation against existing solutions.

And that of course then also helps to open the door at a customer that so far maybe has been not a very strong Sartorius account and that of course is something that we then particularly in the U.S. to win accounts that have been maybe closed or almost closed in the past for us.

So that's the mechanism but again I like, and we like to rather take that we were saying let's win the same share of new business in the U.S. and other regions.

Okay. Thank you very much.

Hello. Thank you very much for taking my question.

It's a little bit of a follow-on question what's just was asked, and I was just wondering if Sartorius market position within the CMO or CDMO market is a stronger than in the classical pharma and biotech space. And does this maybe an explanation due to this outsourcing production outsourcing trend that Sartorius is constantly growing, outgrowing the market?

We do have a strong position at the PCMO players that's for sure fact, but it's definitely not like the key or only growth driver or driver to outperform most of our competition as coming back to the aspect that we were discussing before the gain of market share in the U.S. This is an aspect of different nature and we definitely also win a lot of business with the originators as we do with biosimilar producers which is also different kind of customer.

So, it's right, we do grow nicely with CMO key accounts and also smaller CMOs, but we are happy to say that our growth is really very broadly based not only in regard to our product segments, and the regions, but also in regards for the customer types of the customers that we have.

Okay, thank you very much.

Yeah, thanks, if I could follow-up. if you could share some thoughts please surrounding the proposed spinout of GE Healthcare, which I think soon to happen in the beginning of next year.

Just wonder whether you think this could give rise to a more focused competitor or there will be no change at all or there will be a period of disarray in which this spin-off occurs. Lastly, maybe could you share some thoughts about the potential to price out some of the bioprocess assets from GE as part of this process?

If there any help in that regard. Thank you.

Yeah, it was very interesting question Scott as far as we understand that and expect that. Also, there will be spin-off of the healthcare business in total by GE.

So, including the life science business, I also would not expect as of today, that GE or GE Healthcare would divest significant parts of the life science business very early particularly not any attractive pieces. The question in how far the spin-off will disrupt the business short term.

I'm not sure the business has been running quite independently so far. So, I guess they will be able to operate that pretty much as that has been so far, which means I guess not only because our business rather has long sales cycles and everything and anyways, but I would expect much of a change as of today given the fact that it has an independent business already so far quite largely.

Thank you very much for your thoughts. Appreciate it.

Hey, thanks for taking my follow-up questions, That's also regarding the competitive situation in general as a follow-up. So, if you look at your performance in North America and also at present, how important is it for you to offer the full value chain from that project definition management up and downstream processes.

Has this been the key differentiating factor meanwhile for you rather other U.S. competitions.

So how is the situation so any color you can share here would be much appreciated.

Sure. In the U.S.

but also in other regions you would find different type of customers with different preferences and different behavior. And there are couple of customers particularly those who are around in the biopharma space for very long who have maybe a strong owned team of process engineers onboard.

Who would be able to do process design by themselves. And those customers typically maybe talk to you more on a product basis.

But then of course you also have customers and there maybe the tendency would be more in Asia that don’t have such a background and they strongly expect a solution provider and they’re looking for a solution provider to talk to. So, somebody who really helps them to set-up an entire process for them and optimize that for them.

So, that’s the general situation. So, different kind of customers who have different interest.

However, what one can say is that there is a tendency towards that that customers are looking for solutions rather than products, which is I think a very typical trend that you see when an industry is maturing step-by-step that our customers ask themselves what is their -- what's the core competence is. Whether it’s the development of a new drug and maybe the marketing of a new drug or whether it’s the production process for instance.

And then, I would say there is a clear trend towards that customers and also those who are established and have an own strong engineering backbone probably are rather looking for a partner with such solution provider abilities. So, that’s the underlying trend across the regions and also across I would say our customer segments to quite some extent.

And if we then look on this in comparison to our competition then I clearly would say that this gives us an edge. We probably have built the solution provider offering earlier than others.

And therefore also, a couple of our acquisitions that we have made partially already 15 years ago or so have been like first moves of building such a solution offering and that has brought us into the position to acquire the market leaders in segments like bioreactors, in segments like single-use bags and the like. And therefore, I would say that given the trend that I tried to describe, the fact that we have built this portfolio that is differentiating positively in comparison to most of our competition is indeed an asset and a positive factor that we have.

Thank you very much.

Thank you very much, everybody for attending our call for the half year’s figures. I appreciate that very much.

Also, the discussion that we had, looking forward to talk to you again latest when we publish our Q3 figures in approximately three months’ time. Have a great summer.

Talk to you. All the best.

Bye-bye.