Biotest AG: Biotest increases sales despite greater financial pressure
Biotest AG / Preliminary Results
14.07.2010 10:19
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Biotest increases sales despite greater financial pressure
- In the first half of 2010, sales up 4.0% on the previous year at
EUR 227.1 million
- Market environment and government savings package impact earnings
- Board of Management scales down expectations for the full year 2010
Dreieich, Germany, 14 July 2010. Today, the Biotest Group issued an ad hoc
announcement containing information about business developments in the
first half of 2010 and its expectations regarding sales and earnings for
the current financial year.
According to preliminary figures, sales totalled EUR227.1 million in the
first six months of this year, an increase of 4.0% compared with the figure
for the same period in 2009 (EUR218.4 million). Earnings before interest
and taxes (EBIT) came in at EUR23.7 million (-24%) (previous year: EUR31.2
million) for the first half of the year. As a result, earnings developments
fell far short of the Company's expectations.
This was largely due to pressure on the prices for plasma proteins -
especially polyvalent immunoglobulins and coagulation factors - caused by
the supply surplus. In addition to this, Biotest was unable to market the
planned product quantities in all of its sales regions in the first half
year. As a result, business with the polyvalent immunoglobulin Intratect(R)
in Germany was unable to meet the Company's expectations in terms of the
quantity sold and the prices obtainable. The same applies to sales of the
coagulation products Haemoctin(R) on the Eastern European market.
Over the last five years, the volume of blood plasma collected in the USA
has grown by up to 20% per annum. Given the growth in demand for end
products of 5% to 8%, it was clear to the entire plasma industry that the
situation would develop from a demand surplus to a supply surplus. However,
this development resulted in prices tumbling more sharply than expected.
This is particularly true for polyvalent immunoglobulins, while prices for
special products (including hyperimmunoglobulins) have tended to remain
relatively stable to date.
Current market data show that the amount of blood plasma collected has been
falling since mid-2009. In the medium to long term, this will cause the
supply to the end product market to fall again, bringing supply and demand
in line with one another. However, both the long manufacturing cycles and
the stocks of preliminary, semi-finished and finished products which
companies have built up mean that no easing can be expected in the short
term.
Biotest's business will also be strained as a result of the
GKV-Änderungsgesetz* as part of the German healthcare reform. The act comes
into effect on 1 August 2010. The compulsory discount for public
pharmacies, which was increased from 6% to 16% and has been expanded to
incorporate prescriptions associated with outpatient hospital treatment,
applies for all of Biotest's plasma proteins with the exception of the
coagulation products Haemoctin(R) and Haemonine(R). The price decree also
affects all Biotest plasma proteins apart from coagulation factors. This
decree, which comes into force on 1 August 2010 and will provisionally
apply until the end of 2013, entails all prices being reduced to the August
2009 levels. This act will directly reduce both the revenue generated with
plasma proteins in Germany and Biotest's earnings. On the basis of an
initial analysis, the Board of Management expects this to have an impact of
around EUR5 to EUR6 million a year.
These two factors - market developments falling short of expectations and
the consequences of the public healthcare savings package - have prompted
the Board of Management to adjust its earnings target for the current
financial year. The Biotest Group still anticipates low, single-digit sales
growth compared with the previous year (2009 revenue: EUR438.6 million) and
now forecasts EBIT totalling EUR45 million
(+/-10%) (2009: EUR61.6 million). Biotest had previously strived for the
full year 2010 to generate EBIT on a par with the previous year. All the
figures relate to continuing operations.
In discontinued operation, EBIT will be up to now at EUR18.4 million for
financial year 2010 due to profits from the disposal of the Company's
transfusion and transplantation diagnostics activities. EBIT from
discontinued operation has to be added to the anticipated EBIT from
continuing operations. In 2009, Biotest Group EBIT, including continuing
operations and discontinued operation, amounted to EUR58.5 million.
The Board of Management still expects Biotest to develop positively in the
medium to long term. If the volume of blood plasma collected continues to
fall in the coming months as expected, the price situation for plasma
protein products currently looks set to ease in late 2011. This is due in
part to the fact that demand for plasma proteins continues to grow. A
broader range of indications, the shift towards higher dosages for
immunoglobulins, tapping new markets and the insufficient care still
provided to some 75% of the world's haemophilia patients are the key
driving forces behind this development.
'Cyclical developments in supply and pricing are typical for our industry,'
said Prof. Dr. Gregor Schulz, Chairman of the Management Board at Biotest
AG. 'However, as this cycle coincides with the global public finance crisis
and the associated pressure to cut costs in healthcare budgets, it is
proving more pronounced than we originally anticipated.'
Biotest reacted to this development early on and has further stepped up the
measures to safeguard sales and earnings which it initiated last year.
Amongst other measures, the package includes steps to boost efficiency and
drive down costs across all divisions.
'We are confident that this short-term dip in sales and earnings does not
impair Biotest's good prospects,' added Prof. Dr. Schulz. 'The same applies
to the further internationalisation of our operations, for example by
investing in high-growth markets and R&D projects.' Biotest already
generates around three quarters of its sales outside Germany.
For details of current developments in the Company's business, asset,
financial and earnings position, please refer to the interim financial
report for the period ended 30 June 2010, which Biotest will publish on 12
August 2010.
*GKV-Änderungsgesetz - German act to modify statutory health insurance and
other regulations (Statutory Health Insurance Restructuring Act)
Disclaimer
This document contains forward-looking statements on overall economic
development as well as on the business, earnings, financial and assets
position of Biotest AG and its subsidiaries. These statements are based on
current plans, estimates, forecasts and expectations of the company and are
thus subject to risks and elements of uncertainty that could result in
significant deviation of actual developments from expected developments.
The forward-looking statements are only valid at the time of publication.
Biotest does not intend to update the forward-looking statements and
assumes no obligation to do so.
About Biotest
Biotest is a provider of pharmaceutical and biotherapeutic drugs as well as
reagents and systems for microbiology. With a value added chain that
extends from pre-clinical and clinical development to worldwide sales,
Biotest has specialised primarily in the areas of application of immunology
and haematology. In its Plasma Protein segment, Biotest develops and
markets immunoglobulins, coagulation factors and albumins based on human
blood plasma. These are used for diseases of the immune and haematopoietic
systems. In the Biotherapeutic segment, Biotest researches into the
clinical development of monoclonal antibodies, including in the indications
of rheumatoid arthritis and cancer of plasma cells. The products of the
Microbiological Monitoring segment are primarily used in hygiene
monitoring. Biotest has more than 1,900 employees worldwide. The preference
shares of Biotest AG are listed in the SDAX on the Frankfurt stock
exchange.
Securities' ID No., ISIN ordinary shares: 522720, DE0005227201
Securities' ID No., ISIN preference shares: 522723, DE0005227235
Listing: Prime Standard/regulated market
Frankfurt, Berlin, Düsseldorf, Hamburg, Stuttgart
14.07.2010 Ad hoc announcement, Financial News and Press Release distributed by DGAP.
Media archive at www.medientreff.de and www.dgap.de
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Language: English
Company: Biotest AG
Landsteinerstraße 5
63303 Dreieich
Deutschland
Phone: 0 61 03 - 8 01-0
Fax: 0 61 03 - 8 01-150
E-mail: investor_relations@biotest.de
Internet: http://www.biotest.de
ISIN: DE0005227235, DE0005227201
WKN: 522723, 522720
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, Hamburg, Stuttgart
End of News DGAP News-Service
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