October 2018
Investors Presentation
Disclaimer
This presentation contains statements concerning the future performance of the Sartorius Group. These statements are based on assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, we cannot guarantee that they will actually materialize. This is because our assumptions harbor risks and uncertainties that could lead to actual results diverging substantially from the expected ones. It is not planned to update our forward-looking statements.
Throughout this presentation, differences may be apparent as a result of rounding during addition.
AgendaOverview and Strategy
Lab Products & Services Division
Bioprocess Solutions Division
FY 2018 Guidance | H1 2018 Results
Sartorius at a glance
4
Clear mission
A leading partner of the biopharma industry
Making R&D and production processes of innovative biologics more efficient
Biopharma market fueled by strong long-term growth drivers
Double-digit market share in key technologies
Diversified revenue base and high share of recurring revenues
Industry focus
Clear mission
Strong positioning
Attractive market
Stable business model
>7,500Employees
~ €1.4bnSales revenue
25.1%EBITDA margin2)
~13%Sales CAGR1) 2012-2017
30Countries
Based on FY 2017 figures 1) For continued operations, in constant currencies 2) Excluding extraordinary items
Molecule developmentCell line and process development
Production upstream & downstream
Lab Products & Services Division
Bioprocess Solutions Division
Quality | Testing | Validation
5
Strategic focus on the biopharma market
Strong market fundamentals
6
+6.5%CAGR
worldwideprescription drugsales 2017-2022
9bnpeople by 2050; >2bn 60 yrs or
older
Rise of biosimilars
~25%CAGR
biosimilar sales2017-2025
Strong R&D pipeline; advances in gene and cell therapy
~8%CAGR
biopharma market 2017-2025
>50% Share of biologics in pharma R&D
pipeline
Favorable demographics Increasing healthcare spending
7
19.7 20.1 20.521.0
23.6
25.0 25.1
18
19
20
21
22
23
24
25
26
27
28
29
30
0
200
400
600
800
1000
1200
1400
2011 2012 2013 2014 2015 2016 2017
Sales revenue more than doubled over the last 6 years
Sales revenue EBITDA1) margin in % Intec Division; divested in 2|2015
+13.6%
+9.3%
+12.6%+16.0%
+18.2%
+8.8%
Sales CAGR ~ +13%EBITDA1) margin +5.4pp
€1.4bn
€733m
~ €650m
Sales growth and CAGR for continued operations, in constant currencies 1) Excluding extraordinary items
Regional balance better reflecting end-markets
8
2011
Asia | Pacific ~ 22%
Americas ~ 25%
EMEA ~ 53%
Global pharmaceutical market Sales by region 2011
~ €650m
Sales by region 2017
2017
Asia | Pacific ~ 25%
Americas ~ 32%
EMEA ~ 43%
CAGR ~ €1.4bn
2017
Asia | Pacific ~ 26%
Americas ~ 51%
EMEA ~ 23%
~ €1.1tn
~ +16%
~ +15%
~ +11%
CAGR for continued operations, in constant currencies
M&A strategy – adding innovation, enhancing focus
9
2011 2018
Lonza CellCulture Media
TAP Biosystems AllPureTechnologies
BioOutsource Cellca kSep Umetrics
IntelliCyt ViroCyt Essen BioScienceDivestment
Intec Division
Acquisition criteria
Portfolio: Complementary products or technologies
Market Position: Either among the Top 3 or unique selling point
Integration: Management capacity; cultural fit
Price: Fair valuation; reach Sartorius‘ profitability level in 2-3 years
Infrastructure prepared for further organic growth
10
New ERP and extension of global IT infrastructure
Yauco, Puerto RicoDoubling of fluid managementand filter capacities
Goettingen, GermanyExtension of headquarters
Aubagne, France Capacity extensionof bag production
8.87.7
9.110.1
11.7
14.9 ~15
10
02468
101214
2012 2013 2014 2015 2016 2017 2018 2019
Capex ratioin %
~x% Major projects
Regular expansion~3%
Cap. R&D~2%
Maintenance
Capex composition 2018
~3%
~7%
20121) 20182)
1) Incl. discontinued operation 2) Based on 2018 guidance
20131)
Sartorius 2025 targets and initiatives
~28% EBITDA margin
~ 2|3Organic
~ 1|3 Acquisitions
Portfolio Add high-impact innovation, e.g. digital tools Enhance process development capabilities Expand into adjacent applications
Regional Participate in strong Chinese market growth Continue to outperform the important U.S. market
Operations Accelerate workflows across the organization
through digitalization Extend manufacturing base in Asia
11
Strategic initiatives 2025 targets
~€4bn1
Sales revenue
2025 targets are based on 2017 currency exchange rates; non-organic revenue growth is accounted for companies acquired from 2018 and onwards; EBITDA excluding extraordinary items
Sartorius 2025 ambition per division
12
SSB | BPS
~€2.8bnSales revenue
~30% EBITDA margin
~€1.2bnSales revenue
~25% EBITDA margin
~28% EBITDA margin
Sartorius GroupLPS
~€4bn1
Sales revenue
AgendaOverview and Strategy
Lab Products & Services Division
Bioprocess Solutions Division
FY 2018 Guidance | H1 2018 Results
517.8
1,010.3
23.0
28.0
22
24
26
28
30
32
34
36
250
350
450
550
650
750
850
950
1050
1150
2013 2014 2015 2016 2017
+14.2%p.a.
Total solution provider for biomanufacturing
14
Global footprint
High share of recurring revenuesTrack record of dynamic growth
Asia | Pacific ~ 24%
Americas ~ 35%
EMEA ~ 41%
+14.2%CAGR
Single-use products ~ 75%
Equipment ~ 25%
+16.5%CAGR
Sales revenue, € in millions; EBITDA margin1) in %
Division sales by region
Division sales by category
Based on FY 2017 figures; sales CAGR in constant currencies 1) Excluding extraordinary items
Snapshot of the Bioprocess Solutions Division
15
Quality | Testing | Validation
Downstream processingUpstream processingProcess development
Covering all steps of the biopharma process chain
Leading positions in key technology platforms
Sartorius Merck | Millipore
Danaher | Pall
ThermoFisher
GE Top 3 Players
Filtration1. Merck | Millipore2. Danaher | Pall3. Sartorius
Fluid Management
1. Sartorius2. Thermo Fisher3. Merck | Millipore
Fermentation1. Sartorius2. Thermo Fisher3. GE
Purification1. GE2. Merck | Millipore3. Danaher | Pall
Cell Culture Media
1. Thermo Fisher2. Merck | Millipore3. GE
Pie charts indicate completeness of product offering16
The biopharma market is not yet mature, but is maturing
17
... not mature because
Underpenetrated global market
Strong flow of innovation
Time-consuming product development
... but maturing because
Increasing importance of product costs and time to market
Robustness and ease of use of tools are becoming more important
Companies invest in market consolidation
>10+ years
Cum
ulat
ive
inve
stm
t(€
in m
illio
ns)
Data adopted from: Paul (2010) Nature Rev DD & Association of the British Pharmaceutical Industry (2017)
Cumulative investment and absolute survival rate in drug development
0
500
1,000
1,500
0
20
40
60
80
100
Targ
et t
o le
ad
Prec
linic
al
Phas
e 1
Phas
e 2
Phas
e 3
Regi
stra
tion
Abso
lute
sur
viva
l rat
e %
Enhanced process control and robustness
Improved product quality
Predictive process control
Digitalization is arriving in biopharma
Sartorius offers the leading software for bioprocess data analytics
18
Collect data
Monitor & control
Analyze
Improveprocess
Powerful solutions for modeling and optimizing development and manufacturing
Help to gain insights from complex data sets
Data analytics just at the beginning in biomanufacturing and shows high potential
U.S. remains most important market; China with highest growth rates
Biologics market growth forecastCAGR 2018 to 2022, $ in billions
U.S.~ 163
China~ 60~ $345bn
Europe~ 65
ROW~ 57
U.S.~ 115
China~ 33 ~ $250bn
ROW~ 51
Europe~ 50
~ +16% China
~ +9% U.S.
~ +7% Europe
19
Biologic market in China is at an early stage, but has strong growth potential
Supportive regulatory environment and solid industry foundation;biopharma considered a priority sector
Manufacturing capacity in China to triple by 2020
~ 230
~ 402~ 10
~ 58
2017 2025
Other biologics Biosimilars
~ +25%CAGR
Biosimilars: Strong growth, big opportunities
20
Biosimilars will outperform the biologics market€ in billions
Major blockbuster biologics are going off patent
Lower prices will lead to higher production volumes
Time-to-market is key as only the first fewbiosimilar providers are most likely to be profitable
APAC penetration relatively high; U.S. at the beginning
Leader in the growing single-use technology market
Single use products offer advantages over conventional stainless-steel devices
Capex|Opex reduction over entire lifecycle
Reduced risk of cross-contamination
Higher flexibility; advantageous for biosimilars
-25-35%
SUReference SU
-55-65%
ReferenceReference SU
-65-75%
Constructioncost
Energycost Water cost
-30-50%
Reference SU
Time-to-market
Single-use market penetration expected to increase from ~35% to ~75%
21
0
50
100
150
200
250
300
Limited dependence on individual accounts
More than half of 2017 BPS sales were generated with the Top 50 customers
No individual customer accounts for more than 5% of BPS sales revenue
No single drug accounts for more than 3% of BPS sales revenue
Limited dependence on individual accountsLong-term business relationships with leading global (bio-)pharma companies
Sales to Top 50 customersin 2017, € in millions
Top 10 11 to 20 21 to 30 31 to 40 41 to 50
Cumulativeshare~ 25%
~ 40%~ 45% ~ 50% ~ 55%
22
2)
Four strong pillars drive above-average growth
~ +11%Organic CAGR1)
23
0
2013 2014 2015 2016 2017 2018
Pharma market
Biopharma market
Single-use penetration
Market share gains
CAGR 4-7%
CAGR ~8%
Double-digit growth
Esp. in North America
1) CAGR 2013 to 2018e, excluding FX effects and acquisitions 2) Midpoint of 2018 guidance
AgendaOverview and Strategy
Lab Products & Services Division
Bioprocess Solutions Division
FY 2018 Guidance | H1 2018 Results
273.8
15.9 16.0
10
15
20
25
30
35
100150200250300350400450500
2013 2014 2015
Snapshot of the Lab Products & Services Division
25
Global footprint
Asia | Pacific ~ 27%
Americas ~ 25%Premium vendor for laboratories
EMEA ~ 48%
Division sales by region
394.2
16.018.0
~+1pp
10
15
20
25
30
35
100150200250300350400450500
2016 2017 2018e
Division in transition to a new growth and profitability profile
+1.4% +5.0%
Based on FY 2017 figures; sales growth and CAGR in constant currencies 1) Based on 2018 guidance 2) Excluding extraordinary items
2018e1)
+7.9% +22.0%
~ +12-15%
Build-up of bioanalytics portfolio
since 2016
Sales revenue, € in millions; EBITDA margin2) in %
Our ambition: Reduce costly trial & error in drug discovery
Drug discovery4 ½ years
Testing & improving1 year Clinical trials
5 ½ yearsDrug approval1 ½ years
€490m €110m €640m €60m
1 in 10,000Chance for a candidate to make it to market~€500m
Average costs of drug discovery
~10 yearsFrom drug discovery to approval
Facilitate digitalization and automatization
Lower likelihood of failure
Reduce time and costs in molecule development
Our approach
26Schematic example of biologic drug discovery with data from Association of the British Pharmaceutical Industry
Innovative platforms to increase biopharma R&D efficiency
Acquisition of U.S. companies IntelliCyt (2016) and Essen BioScience (2017)
Solutions for high-throughput and real-time quantitative cell analysis
Automatization, acceleration and improvement of basic research steps
Reduction of costs in drug discovery phase and clinical trials
IncuCyte: Real-time cell analysis IntelliCyt: Innovative cell screening
27
Platereaders3)
Bioanalytics portfolio with little competition and high value added
28
Rich
ness
of d
ata
Sample throughput per plate
Works on cells in suspension
Works on cells on 2D surface
Independent of cell attachment
1) Becton Dickinson, Merck Millipore, PerkinElmer, Thermo Fisher 2) Beckman Coulter, Becton Dickinson, Merck Millipore, Thermo Fisher3) Agilent Technologies, Danaher, Merck Millipore, PerkinElmer
IntelliCyt processes thousands of plates and generates large amounts of data for rapid and clear target identification
IncuCyte delivers video-based insights and improved workflows for real-time quantitative analysis of living cells
Microscopy High contentimaging1)
Flowcytometry2)
IntelliCyt
IncuCyte
Plate readers3)
~ 3.3~ 4.3
~ 0.8
~ 1.4
2018 2025
LPS ex bioanalytics Bioanalytics
+3.5%CAGR
29
Addressable market of LPS€ in billions
+10.0%CAGR
Bioanalytics increases addressable market and changes growth profile
Different growth rate of bioanalytics due to high exposure to biopharmaceutical R&D
By 2025, two-thirds of the addressable market growth will come from bioanalytics
Thus, growth and profitability profile of LPS is changingover time
Strong market position in key product categories
Leading positions in laboratory products used for research and quality control
Average global market share of > 10%
High gross margins offer potential for economies of scale
Growth potential especially in the U.S. and Asia
Lab Balances #2 Pipettes #4 Lab Filtration #3 Microb. Analysis #2(membrane based)
30
Scalable business with considerable growth and margin potential
31
Well established sample prep. portfolio
Premium instruments and consumables offering with strong global positions
Market share opportunities in certain regions to be addressed primarily by direct sales force
Unique bioanalytics portfolio established
Innovative technologies added through recent acquisitions
Combination with Sartorius’ global reach provides significant growth potential
AgendaOverview and Strategy
Lab Products & Services Division
Bioprocess Solutions Division
FY 2018 Guidance | H1 2018 Results
2018 revenue outlook confirmed for LPS, raised for BPS and Group
33
Growth guidance includes non-organic contribution by recent acquisitions: ~ 0.5pp for BPS and ~ 2.5pp for LPS, i.e. ~ 1.0pp for the Group
Capex ratio ~ 15% (FY 2017: 14.9%)
Due to the U.S. tax reform, SAG´s tax rate is expected to decrease by 2pp to around 27% from 2018 onwards
FY 2018 Guidance1) Previous New
Sales revenuegrowth
UnderlyingEBITDA margin
Sales revenuegrowth
UnderlyingEBITDA margin
Sartorius Group ~ 9% - 12% ~ +0.5ppvs. FY17: 25.1%
~ 12% - 15% ~ +0.5pp
Bioprocess Solutions ~ 8% - 11%~ +0.5pp
vs. FY17: 28.0%~ 12% - 15% ~ +0.5pp
Lab Products & Services ~ 12% - 15%~ +1.0pp
vs. FY17: 18.0%~ 12% - 15% ~ +1.0pp
1) In constant currencies
Strong top-line growth; earnings margin 25.0%
34
Sartorius Group € in millions unless otherwise specified
H1 20171) H1 2018 in % in % cc2)
Sales revenue 702.5 758.4 +8.0 +11.9
Order intake 741.9 807.6 +8.9 +12.7
Underlying EBITDA3) 172.9 189.5 +9.6
Underlying EBITDA3) margin in % 24.6 25.0 +0.4 pp
Underlying EPS4) (ord.) in € 1.02 1.16 +14.1
Underlying EPS4) (pref.) in € 1.03 1.17 +14.0
Acquisitions contribute ~ 2pp of non-organic sales growth
Restatement of H1 2017 figures due to PPA finalization for Essen BioScience and Umetrics
1) Restated after PPA finalization 2) Constant currencies 3) Underlying = excluding extraordinary items 4) Underlying EPS = based on net profit afternon-controlling interest; adjusted for extraordinary items as well as amortization and based on a normalized financial result and tax rate
301.8324.4
172.2 184.4
228.5249.6
Growth in all regions; highest momentum in the Americas
35
Asia|Pacific ~ 24%
Americas ~ 33%
EMEA ~ 43%
~ €758m
Acc. to customers‘ location; growth in constant currencies
+12.2 %+16.6 % +8.4 %
H1 17
Americas€ in millions
EMEA€ in millions
Asia|Pacific€ in millions
Sales by Regionin %
H1 17 H1 18H117H1 18 H1 18
Americas: BPS with high momentum versus moderate comps; LPS growth fueled by Essen acquisition
EMEA: Robust performance driven by BPS growth; weaker markets for LPS
Asia|Pacific: Both divisions with solid growth rates against high comps
140.0 153.9
H1 17 H1 18
BPS: Strong performance in Q2
36
Order Intake € in millions
Sales Revenue€ in millions
Underlying EBITDA & Margin€ in millions
546.9 594.6
H1 17 H1 18
510.1 550.3
H1 17 H1 18
27.4%28.0%
+12.6% cc+8.7%
+11.9% cc+7.9%
+10.0%
Significant sales growth with single-use products; cell culture media business picking up
Umetrics acquisition contributes close to 1pp of non-organic sales growth
Order intake includes equipment projects; somewhat above expectations
Underlying EBITDA margin rises against unfavorable FX due to economies of scale
LPS: Continued positive development in line with expectations
37
Essen BioScience acquisition contributes ~5pp of non-organic sales growth
EBITDA margin reached prior-year level as positive economies of scale and less favorable FX leveled out
33.0 35.5
H1 17 H1 18
192.4 208.1
H1 17 H1 18
17.1% 17.1%
+12.0% cc+8.1%
+7.8%
195.0 213.0
H1 17 H1 18
+13.1% cc+9.2%
Order Intake € in millions
Sales Revenue€ in millions
Underlying EBITDA & Margin€ in millions
Cash flow influenced by higher earnings and lower taxes
38
Net operating cash flow considerably enhanced by higher earnings
Net investing cash flow in previous year primarily reflects the Essen and Umetrics acquisitions
Capital expenditures in line with expectations
Sartorius Group € in millions unless otherwise specified
H1 20171) H1 2018 in %
Underlying EBITDA 172.9 189.5 +9.6
Extraordinary items -14.7 -13.9 +6.0
Financial result -14.9 -11.0 +26.0
Underlying net profit2),3) 69.9 79.8 +14.1
Reported net profit3) 46.1 57.3 +24.4
Net operating cash flow 54.3 92.0 +69.2
Net investing cash flow4) -436.1 -97.4 n.m.
Capex ratio (in %) 12.9 13.2 +0.3pp
1) Restated after PPA finalization 2) Underlying net profit = net profit adjusted for extraordinary items, amortization and based on a normalized financial result and tax rate 3) After non-controlling interest 4) Net cash flow from investing activities and acquisitions
Key financial indicators remain at robust levels
39
Key Financial Indicators
Sartorius Group 31.12.17 31.06.18
Equity ratio in % 35.1 34.9
Net debt in millions of € 895.5 955.3
Net debt | underlying EBITDA 2.5 2.60.0
0.6
1.2
1.8
2.4
3.0
0
200
400
600
800
1000
Q1-Q42014
Q1-Q42015
Q1- Q42016
Q1-Q42017
Q22018
Net debt in millions of € (lhs)Net debt to underlying EBITDA (rhs)
Net Debt and Net Debt to Underlying EBITDA
Appendix
Sartorius shares – an attractive investment
41
High entry barriers, low price-sensitivity and consolidated
competitive landscape
Biopharma market fueled by long-term growth drivers
Leading market positions in key technologies and high
brand awareness
Global presence with strong base in growth regions
Diversified revenue base and high share of recurring
revenues provide low volatility
Proven growth track record: Sales CAGR of ~13% over the
last five years
Sartorius legal & operational structure
100%~ 74%
Other Sartorius Subsidiaries
Lab Products & Services DivisionBioprocess Solutions Division
Sartorius Group Operational Setup
~ 74% Sartorius AG ~ 26% Free float
Sartorius AGStock market listed in Germany1)
Sartorius Stedim Biotech S.A. Stock market listed in France
> 50% Administered by executor ~ 34% Bio-Rad Laboratories ~ 9% Treasury shares ~ 5% Family owned ~ 2% Free floatO
rdin
ary
shar
es ~ 91% Free float ~ 9% Treasury shares
Pref
eren
ce sh
ares
Sartorius Group Legal Setup
42
1) Information on shareholdings and shares in free float pursuant to Sections 33 et seq. of the German Securities Trading Act (WpHG). Reporting obligations refer only to ordinary shares and not to non-voting preference shares.
Fermentation & Cell Culture Media
Extract of the Bioprocess Solutions’ product portfolio
Filtration Purification
Fluid Management
43
Pipettes
Extract of the Lab Products & Services’ product portfolio
Filtration | Lab Filtration
Lab Balances | Lab Water Systems Bioanalytics
44
Recap 2020 targets and initiatives
~€2bnSales revenue
~ 3|4Organic
~ 1|4 Acquisitions
Portfolio Complementary extensions through alliances
and acquisitions Own product development
Regional Gain share in North America Leverage strong market growth in Asia
Infrastructure Expansion of production capacity Significant investments into IT infrastructure
45
Strategic initiatives 2020 targets
~26-27% EBITDA margin
2020 targets are based on 2015 currency exchange rates; EBITDA excluding extraordinary items
Executive Board of Sartorius AG
Rainer Lehmann, CFOsince 2017
Finance, IT, Business Processes
Joachim Kreuzburg, CEOsince 2003
Corporate Strategy, Legal & Compliance, Operations, Communications, Human Resources
Reinhard Vogtsince 2009
Marketing, Sales & Services
46
Petra Kirchhoff
Head ofCorporate Communications & IR
Phone: +49.551.308.1686E-mail: [email protected]
Sartorius Corporate Administration GmbHOtto-Brenner-Straße 2037079 Goettingen, Germanywww.sartorius.com
Financial calendar and contacts
47
Ben Orzelek
Head ofInvestor Relations
Phone: +49.551.308.1668E-mail: [email protected]
October 11, 2018SdK Private Investors Event | Rendsburg
October 31, 2018Société Générale Roadshow | Paris
November 12, 2018HSBC Healthcare Day | Frankfurt
January 10-11, 2018Oddo Midcap Conference | Lyon