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Bio-Rad Laboratories Maps Growth Trajectory Focused on Biopharma, Asia/Pacific, New Products

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NEW YORK – In its first investor day presentation since 2017, Bio-Rad Laboratories offered both high-level and granular insights into the direction of its business. The firm is expecting a 9 percent compound annual growth rate through 2025 in its core business, driven by an increased focus on biopharma and the Asia/Pacific market. Growth will also be spurred by a pipeline of new product offerings, such as multiplex syndromic molecular diagnostic panels and new digital PCR instruments.

Bio-Rad has been around for more than 70 years, has nearly 8,000 employees, and currently generates approximately $3 billion in annual sales that is fairly evenly split between its Life Science and Clinical Diagnostics business units.

From this unique perspective, Norman Schwartz, Bio-Rad's CEO, opined at Friday's event that the breathtaking scientific advances of the past few decades are just beginning.

"We are today in the golden age of biology," Schwartz said, adding, "I think we're poised to see a continued acceleration in the biological sciences, in further application and discovery, and in healthcare."

To support this wave of innovation, Bio-Rad has spent the past four years diligently transforming its business. It began in 2015 with globalizing its operations and executing operational and performance improvements. The final phase of the transformation, scheduled between 2023 and 2025, is devoted to enhanced and accelerated growth.

As a result of these transformational strategies, Bio-Rad achieved a compound annual growth rate of 5.2 percent between 2017 and 2020, exceeding its expectations of 3 percent to 5 percent CAGR, Schwartz said. It also tripled its market capitalization since 2017, from $8.3 billion to $22.4 billion, which the firm attributed to improved focus, scale, and operating leverage.

Chief Operating Officer Andrew Last said Bio-Rad reduced its sales, general, and administrative spending and tweaked where and how it is investing in its business over this time, which involved "a lot of restructuring."

For example, it trimmed its headcount by 400 people in the past few years and moved two clinical diagnostics manufacturing facilities from France to Singapore. The firm also restructured its clinical selling organization in Europe, Last said, realigning it to the fact that the market there has become more consolidated.

Bio-Rad will now continue to implement a three-year European restructuring program announced last year that will affect 530 people and lead to a net headcount reduction of about 200 people, Last said.

By 2025, Last said the firm plans to consolidate the R&D from Europe into US and targeted European locations and cultivate Budapest, Hungary, as its hub for administration and customer service, noting that there are approximately 200 employees currently at that site.

Bio-Rad will also move two manufacturing plants to Singapore, which executives said is the leading edge of a broader push to take more life science and clinical diagnostics market share in the Asia/Pacific region.

Schwartz emphasized that the firm's global direct sales model is critical to its ability to stay close to its customers, which he said is a hallmark of the firm's success.

He noted that Bio-Rad has a diverse customer base and geographic profile. It serves more than 150,000 customers, but no single customer accounts for more than 2 percent of sales, he said.

Yet, the customers and markets are also evolving, Schwartz said. "We're seeing a closer connection between disciplines that used to be distinct, defined segments [which] are now more of a continuum of translational research through to its application in healthcare."

In clinical diagnostics, the firm serves hospital, reference, and transfusion labs, while in life sciences it serves academic and government labs, applied markets, and biopharma customers.

From its two business units, Bio-Rad markets more than 8,000 products "across a variety of technologies," Schwartz said. About 70 percent of its sales are counted as "recurring," which he said provides stability and predictability across the business.

Bio-Rad's global presence is broken into 42 percent in the Americas, 33 percent in Europe, the Middle East, and Africa, and 25 percent in Asia/Pacific. "Over time we see this mix evolving to be about equal thirds," Schwartz said.

Overall, Bio-Rad sees a total addressable market of $63 billion, with $23 billion from biopharma, $20 billion from translational research, $16 billion from diagnostics, and $5 billion from applied markets.

Doubling down

Bio-Rad sees the highest growth potentials in biopharma, translational research, and diagnostics, Last said. These are not new spaces for the firm, but it will now increase its investments to align and allocate more of the business to these opportunities.

Last said that the "new modalities" such as RNA vaccines, RNA therapeutics, cell and gene therapies, and protein-based therapeutics, are driving funding, as well as "particular needs in product profiles," and needs for new diagnostics.

"This shapes how we think about how we play in the market," he said, which in turn, "drives our alignment of focus."

Bio-Rad highlighted biopharma in particular as being a very important market segment moving forward, in part because the needs of the biopharma market align with some of Bio-Rad's strengths, Last said.

For example, R&D and manufacturing in biopharma require precision technologies, and tools for single-cell analysis. The sensitivity and absolute quantification engendered by Bio-Rad's Droplet Digital PCR technology could have extensive applications in various stages of biopharmaceutical product development and manufacturing, Last said.

As such, the firm has begun retooling resource deployment to support biopharma, as well as building out its Asia/Pac organization and introducing global strategic account management for large biopharma customers.

Bio-Rad sees a $12 billion diagnostics opportunity and a $10 billion life sciences opportunity in the Asia/Pacific market. It will align its business to support biopharma there as well, with increased investment in manufacturing and logistics in China and Singapore to support growth and SAP deployment to support a commercial footprint by mid-2024.

Bio-Rad's protein purification products are another entry point into biopharma, Last said, including proprietary process resins.

And while the ddPCR opportunity had been characterized by Bio-Rad in the past as a $500 million opportunity that could grow to $1 billion, Last said, "we've spent considerable time in evaluating the real long-term potential for the digital PCR franchise."

Now, through performance enhancement and building out its portfolio, "we get access to a broader set of markets," he said. "We now believe that long-term potential for the digital PCR franchise is in excess of $10 billion," he said, adding that this includes revenues from both clinical diagnostics and life sciences.

In molecular diagnostics, the firm sees digital PCR diagnostics as a $6 billion opportunity and the multiplex syndromic PCR tests it is developing in collaboration with Seegene as a $2 billion opportunity.

The digital PCR diagnostics development is currently focused on reproductive and women's health, infectious disease, transplant monitoring, and oncology, Last said, while the syndromic panels will focus on infectious disease.

Simon May, president of the Life Science business unit, said the firm sees a broadened adoption and new products in digital PCR leading to a $4.2 billion opportunity. Bio-Rad sees $1.9 billion of opportunity in biopharma production and $4.2 billion in cell biology, May said. This is in part due to the fact that there are 1,700 cell, gene, and RNA therapy clinical trials ongoing, according to May, with a favorable regulatory environment evidenced by more than 50 novel therapeutics approved by the US Food and Drug Administration in 2021.

Product pipeline

In its Life Science business, Bio-Rad launched the QX One and CFX Opus systems in recent years.

Going forward, it will be launching a system called the QX600 this year, which May said will have six-channel detection of 100,000 droplets and an AutoDG Flex instrument that provides on-demand droplet count selection.

It will also launch the "all-in-one" QX Continuum digital PCR system in 2023. Developed with technologies acquired with Dropworks, it will be a fully integrated "plate in, answer out" option with 30 minutes to first results and other enhancement to improve the customer experience.

Building from the acquisition of Celsee in 2020, the firm expects to launch a rare cell analysis system call Celselect this year, and single-cell multiomics instruments called ddSeq and Celsingle by 2024.

Overall, May said cell biology represents more than $4 billion in market opportunity for the firm. For single-cell analysis in particular, the space is "dominated by one player right now [but] we know there is an appetite for alternatives," May said, although the barrier to entry in terms of technology and intellectual property is high. "Bio-Rad is one of a very select few players with a ticket to that ball," May said.

Finally, Dara Wright, president of the clinical diagnostics unit, said Bio-Rad will grow its business in hospital, reference, and transfusion labs by extending its core franchises and entering the molecular diagnostics market.

Specifically, the firm plans to expand its regional sales and menu cross-selling for its Bioplex 2200 system and has a pipeline of new assays. It will also grow its quality control offering and broaden its QC analytics and data management portfolio, Wright said.

In MDx, the firm will launch syndromic PCR assays in partnership with Seegene that leverage the installed base of the Bio-Rad CFX PCR instruments and expand to new clinical labs. The menu in development currently includes tests for respiratory diseases, urinary tract infections, sexually transmitted infections, and others.

Wright also noted that digital PCR diagnostics in development — for reproductive health, infectious disease, and transplant monitoring — would have simpler workflows than targeted next-generation sequencing, which in turn could improve time to results, lower the interpretation burden, and reduce cost. These ddPCR MDx R&D efforts "represent the unlocking of the power of this technology across the translational continuum into routine diagnostics," she said.

Although Schwartz emphasized that Bio-Rad is still early in its growth journey, success will be driven by continued focused investment in new products coupled with ongoing efforts to increase operational efficiency.