bioMerieux - 2007 Business Review

Regulatory News: bioMérieux (Paris:BIM), a global leader in the field of in vitro diagnostics, today released its business review for the fourth quarter of 2007 and the full year. FINANCIAL REVIEW Sales Net sales amounted to €1,062.8 million in 2007, a year-on-year increase of 7.4% at constant exchange rates and scope of consolidation (like-for-like), after 5,9% in 2006. Including the 0.5% increase in sales from acquisitions and business development agreements, growth amounted to 7.9%. Led by robust instrument sales, net sales were especially strong in the fourth quarter, rising 9.1% like-for-like on the prior-year period to €284.7 million. In € millions   2007   2006   % change   Q4 2007   Q4 2006   % change Reported   Like-for-like Reported   Like-for-like   Europe(1) 613.2 586.0 +4.6% +5.6% 163.6 154.4 +6.0% +5.9% North America 262.7 268.8 -2.3% +10.2% 69.9 69.1 +1.2% +14.9% Asia-Pacific 118.9 113.1 +5.1% +12.0% 32.4 30.4 +6.3% +12.4% Latin America 68.0 69.0 -1.3% +4.5% 18.8 17.6 +6.6% +9.5%                   TOTAL 1,062.8 1,036.9 +2.5% +7.4% 284.7 271.5 +4.8% +9.1% (1) Including the Middle East and Africa Sales growth reflected the combination of the following factors:     In € millions   2006 net sales 1,037 Impact of divested(1) or discontinued(2) operations (44) 2006 net sales excluding divested or discontinued operations 993 Currency effect (29) Organic growth, at constant exchange rates and scope of consolidation 73 +7.4% Impact of 2007 acquisitions and business development agreements 5 +0.5% Residual sales from divested(1) or discontinued(2) operations 21 2007 net sales 1,063 (1) Hemostasis business (2) Microplate immunoassays in North America "We’re very satisfied with the 9.1% improvement in sales reported in the fourth quarter, as well as the 7.4% organic growth achieved over the full year”, said Chief Executive Officer Stéphane Bancel. "bioMérieux stepped up the pace of expansion in 2007. When we include the additional business generated by acquisitions and business development agreements signed during the year, sales were up by 7.9%, which means that right from the first year, we’re in the middle of the 7 to 9% range set in the 2007-2012 strategic plan.” All of the operating regions reported like-for-like growth for the year: Sales in the Europe - Middle East - Africa region, which accounted for 58% of consolidated business, increased by 5.6% over the period. Sales were slightly up in France, but rose by 7.8% in the rest of the region, primarily on gains in Germany, the Middle East – Africa and the United Kingdom. In clinical applications, growth was led by the bacteriology lines (especially the VITEK®2) and molecular biology products, while sales of immunoassay lines edged up slightly. The VIDAS® range returned to growth, lifted by sales of the VIDAS® B·R·A·H·M·S PCT® and other high medical value assays, as well as by instrument sales. Competition remained aggressive in the microplate segment. Sales of industrial applications were up by 7.8%. In North America (25% of the consolidated total), both the United States and Canada reported double-digit sales growth for the year. In the clinical application business, gains were driven by the bacteriological and molecular biology lines, while industrial application sales rose 14.4% thanks to the strong start to TEMPO® billings and sustained growth in the VITEK®2 lines and the BacT/ALERT® sterility control reagents. Sales rose 12% in the Asia-Pacific region (11% of the consolidated total). Strong growth was reported in China, where sales rose by nearly 20%, in South Korea and Australia. Sales were up slightly in Japan, lifted by the contract with BML. Growth in clinical applications was supported by the bacteriology, immunoassay and molecular biology lines, while industrial application sales rose by 13.3%. In Latin America (6% of the consolidated total), sales were up 4.5% for the year, led by strong growth in Mexico and Argentina. The Brazilian subsidiary reported a decline in molecular biology and microplate sales. Industrial application sales surged 37%, although volumes remained low. In all, clinical applications gained 6.8% like-for-like (8.9% in the fourth quarter), while industrial applications rose 10.7% (10.2% in the fourth quarter).       % change in € millions 2007 2006 Reported   Like-for-like   Clinical Applications 908.9 894.3 +1.6% +6.8% Bacteriology 533.9 505.5 +5.6% +8.9% Immunoassays 288.2 286.9 +0.4% +2.3% Molecular biology 47.3 39.9 +18.7% +19.5% Other lines 39.5 62.0 -36.3% -5.0%   Industrial Applications 153.9 142.6 +7.9% +10.7%           TOTAL 1,062.8 1,036.9 +2.5% +7.4% In clinical applications, gains in all the strategic lines drove an 8.9% increase in bacteriology sales. Immunoassay sales showed a slight increase for the year despite intense competitive pressure in microplates. Sales of VIDAS® reagents rose by more than 3%, with sustained growth in the Asia Pacific region and Latin America. In Europe, sales benefited from the fast ramp-up of sales of the VIDAS® B·R·A·H·M·S PCT® and other high medical value assays. Molecular biology sales were up sharply for the year, despite a decline in Brazil. Industrial applications continued to expand, rising by 10.7% over the year, driven by all of the bacteriology lines. Other quarterly financial highlights The sustained business demand in the second half, coupled with the disciplined management of operating expenses, is expected to have a positive impact on operating income before non-recurring items for the period. Operating margin before non-recurring items should therefore end the year higher than at June 30 (15.1% of sales). Net cash amounted to €15 million at December 31, 2007. 2007 saw the acquisition of Biomedics and BTF, as well as investments in LabTech and AdvanDx. Net debt stood at €9 million at December 31, 2006. With around 3,800 instruments placed with customers during the year, including nearly 1,700 new VIDAS® and MiniVIDAS®, the installed base rose to around 49,000 systems at December 31, 2007. FOURTH-QUARTER OPERATING HIGHLIGHTS Theragnostics bioMérieux has entered into an agreement with Merck & Co. Inc. in which bioMérieux and Merck will collaborate to develop an assay to use in infectious disease studies at Merck. This test will be based on bioMérieux immunoassay technology. International expansion bioMérieux continued to expand its marketing network outside France with the creation of two new distribution subsidiaries: The first, based in Johannesburg, South Africa, provides support across Sub-Saharan Africa. Under an exclusive agreement signed in 2001, bioMérieux products were previously distributed by Omnimed, whose in vitro diagnostics team was transferred to the new company on January 1, 2008. The second, to be created in early 2008 in Algiers, Algeria, will further enhance bioMérieux’s presence in Africa. New product launches Eleven new products were introduced during the fourth quarter. In particular, 510(k) clearance was received from the US Food and Drug Administration to market VIDAS® B·R·A·H·M·S PCT®, making bioMérieux the first company in the US to launch an automated test measuring procalcitonin (PCT), a biological marker for bacterial infections. The test provides an effective response to a major public health challenge by helping to assess the risk that patients admitted to an Intensive Care Unit will progress to severe sepsis and septic shock. Industrial reorganization Activities at the Boxtel site in the Netherlands will be phased out by the end of 2009. It is currently estimated that this decision will result in the recognition of a non-recurring charge of approximately €32 million in the 2007 financial results. Molecular diagnostics R&D and manufacturing will be transferred to Grenoble, where a new plant will be built on the site to accommodate manufacturing of molecular diagnostic systems. Microplate immunoassay R&D, together with the production of raw materials, will be moved to Marcy l’Etoile. Information technology To align its worldwide IT base, the Company decided in late 2007 to migrate all of its various ERP applications to a single SAP solution. BUSINESS ENVIRONMENT Research tax credits The French research tax credit system has been reformed, to raise the credit on eligible research expenditure from 10% to 30%. For information, the Company recognized a research tax credit of €3.7 million in France in 2006. 2008 OBJECTIVES Based on the sustained growth in business, the Company expects to achieve like-for-like growth in 2008 sales at least equal to the 7.4% reported in 2007. The basis of comparison will be 2007 sales excluding the residual impact of divested or discontinued operations; i.e. €1,042 million. Growth could rise to 8.5% including the impact of the business development agreements. NEXT FINANCIAL PRESS RELEASES 2007 financial results: Monday, March 17, 2008 First-quarter sales and business review: Tuesday, April 29, 2008 The above forward-looking statements are based, entirely or partially, on assessments or judgments that may change or be modified, due to uncertainties and risks related to the Company's economic, financial, regulatory and competitive environment, notably those described in the 2006 Registration Document. Accordingly, the Company cannot give any assurance as to whether it will achieve the objectives described above. The Company does not undertake to update or otherwise revise any forecasts or objectives presented herein, except in compliance with the disclosure obligations applicable to companies whose shares are listed on a stock exchange. ABOUT BIOMERIEUX Advancing diagnostics to improve public health A world leader in the field of in vitro diagnostics for over 40 years, bioMérieux is present in more than 150 countries through 36 subsidiaries and a large network of distributors. In 2007, revenues reached €1,063 billion with 86% of sales outside of France. bioMérieux provides diagnostic solutions (reagents, instruments, software) which determine the source of disease and contamination to improve patient health and ensure consumer safety. Our products are used for diagnosing infectious diseases and providing high medical value results for cardiovascular emergencies and cancer screening and monitoring. They are also used for detecting microorganisms in agri-food, pharmaceutical and cosmetic products. bioMérieux is listed on Euronext Paris. Other information can be found at www.biomerieux.com.