Investors Presentation October 2018 Disclaimer This presentation - - PowerPoint PPT Presentation

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.

Agenda

Overvie rview w and Strate tegy gy 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

• f 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

>7,500

Employees

~ €1.4bn

Sales revenue

25.1%

EBITDA margin2)

~13%

Sales CAGR1) 2012-2017

30

Countries

Based on FY 2017 figures 1) For continued operations, in constant currencies 2) Excluding extraordinary items

Molecule development Cell 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

worldwide prescription drug sales 2017-2022

9bn

people by 2050;

>2bn 60 yrs or

• lder

Rise of biosimilars

~25%

CAGR

biosimilar sales 2017-2025

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 20.5 21.0 23.6 25.0 25.1

18 19 20 21 22 23 24 25 26 27 28 29 30 200 400 600 800 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 Cell Culture Media TAP Biosystems AllPure Technologies BioOutsource Cellca kSep Umetrics IntelliCyt ViroCyt Essen BioScience Divestment 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

to Rico Doubling of fluid management and filter capacities Goetti tingen, ngen, Germany many Extension of headquarters Auba bagne gne, Franc nce Capacity extension

• f bag production

8.8 7.7 9.1 10.1 11.7 14.9 ~15 10 2 4 6 8 10 12 14 2012 2013 2014 2015 2016 2017 2018 2019

Capex ratio

in %

~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|3 Organic ~1|3 Acquisitions

Portf tfolio io

• Add high-impact innovation, e.g. digital tools
• Enhance process development capabilities
• Expand into adjacent applications

Regiona ional

• Participate in strong Chinese market growth
• Continue to outperform the important U.S. market

Operation ions

• Accelerate workflows across the organization

through digitalization

• Extend manufacturing base in Asia

11

Strategic initiatives 2025 targets

~€4bn

1

Sales revenue

2025 targets are based on 2017 currency exchange rates; non-organic revenue growth is accounted for companies acquired from 2018 and

• nwards; EBITDA excluding extraordinary items

Sartorius 2025 ambition per division

12

SSB | BPS

~€2.8bn

Sales revenue

~30%

EBITDA margin

~€1.2bn

Sales revenue

~25%

EBITDA margin

~28%

EBITDA margin

Sartorius Group LPS

~€4bn

1

Sales revenue

Agenda

Overview and Strategy Lab Products & Services Division Bioproc rocess ss Soluti utions

• ns Divi

vision sion 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% .2% p.a. Total solution provider for biomanufacturing

14

Global footprint High share of recurring revenues Track record of dynamic growth

Asia | Pacific ~ 24% Americas ~ 35% EMEA ~ 41%

+14.2 .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 processing Upstream processing Process development

Covering all steps of the biopharma process chain

Leading positions in key technology platforms

Sartorius Merck | Millipore Danaher| Pall Thermo Fisher GE Top 3 Players Filtration

• 1. Merck | Millipore
• 2. Danaher | Pall
• 3. Sartorius

Fluid Management

• 1. Sartorius
• 2. Thermo Fisher
• 3. Merck | Millipore

Fermentation

• 1. Sartorius
• 2. Thermo Fisher
• 3. GE

Purification

• 1. GE
• 2. Merck | Millipore
• 3. Danaher | Pall

Cell Culture Media

• 1. Thermo Fisher
• 2. Merck | Millipore
• 3. GE

Pie charts indicate completeness of product offering 16

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 10+ year ars

Cumulative investmt (€ in millions)

Data adopted from: Paul (2010) Nature Rev DD & Association of the British Pharmaceutical Industry (2017)

Cumulative investment and absolute survival rate in drug development

500 1,000 1,500 20 40 60 80 100 Target to lead Preclinical Phase 1 Phase 2 Phase 3 Registration Absolute survival rate %

 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 Improve process

• 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 forecast

CAGR 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 few

biosimilar 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%

SU Reference SU

• 55-65%

Reference Reference SU

• 65-75%

Construction cost Energy cost Water cost

• 30-50%

Reference SU

Time-to- market

Single-use market penetration expected to increase from ~35% to ~75%

21

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 accounts Long-term business relationships with leading global (bio-)pharma companies

Sales to Top 50 customers

in 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

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

Agenda

Overview and Strategy Lab Produc ducts ts & S Service vices s Divis ision ion Bioprocess Solutions Division FY 2018 Guidance | H1 2018 Results

273.8 15.9 16.0 10 15 20 25 30 35 100 150 200 250 300 350 400 450 500 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 16.0 18.0 ~+1pp

10 15 20 25 30 35

100 150 200 250 300 350 400 450 500 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 discovery 4 ½ years Testing & improving 1 year Clinical trials 5 ½ years Drug approval 1 ½ years €490m 0m €110m 0m €640m 0m €60m 60m

1 in 10,0 ,000 00

Chance for a candidate to make it to market

~€500 500m

Average costs of drug discovery

~10 10 years rs

From drug discovery to approval

Facilitate digitalization and automatization Lower likelihood of failure Reduce time and costs in molecule development

Our approach

26

Schematic 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

Plate readers3)

Bioanalytics portfolio with little competition and high value added

28 Richness of data 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 Fisher 3) 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 content imaging1) Flow cytometry2)

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 changing
• ver 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 est stabli blished ed sa sample ple prep.

• p. portf

tfolio io

• Premium instruments and consumables offering with strong global positions
• Market share opportunities in certain regions to be addressed primarily by direct sales force

Unique e bioa

• analyt

nalytics cs portf tfolio

• lio est

stablis blished ed

• Innovative technologies added through recent acquisitions
• Combination with Sartorius’ global reach provides significant growth potential

Agenda

Overview and Strategy Lab Products & Services Division Bioprocess Solutions Division FY 2018 8 Guidan dance | H1 2018 8 Results ts

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
• nwards

FY 2018 18 Guidance ce1)

1)

Previou ious New New Sales revenue growth Underlying EBITDA margin Sales revenue growth Underlying EBITDA margin Sartorius Group ~ 9% - 12% ~ +0.5pp

• vs. 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

Sarto toriu ius s Group

€ in millions unless otherwise specified

H1 20171) H1 2018 in % in % cc2) Sales revenue 702.5 758.4 .4 +8.0 +11.9 Order intake 741.9 807.6 .6 +8.9 +12.7 Underlying EBITDA3) 172.9 189.5 .5 +9.6 Underlying EBITDA3) margin in % 24.6 25.0 .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 after

non-controlling interest; adjusted for extraordinary items as well as amortization and based on a normalized financial result and tax rate

301.8 324.4 172.2 184.4 228.5 249.6

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 Region

in %

H1 17 H1 18 H117 H1 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

Sarto toriu ius Grou roup

€ in millions unless otherwise specified

H1 20171)

1)

H1 2018 in % Underlying EBITDA 172.9 189.5 .5 +9.6 Extraordinary items

• 14.7
• 13.9

.9 +6.0 Financial result

• 14.9
• 11.0

.0 +26.0 Underlying net profit2),3) 69.9 79.8 .8 +14.1 Reported net profit3) 46.1 57.3 .3 +24.4 Net operating cash flow 54.3 92.0 .0 +69.2 Net investing cash flow4)

• 436.1
• 97.4

.4 n.m. Capex ratio (in %) 12.9 13.2 .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 Sarto toriu ius Group 31.12.17 31.0 .06.1 .18 Equity ratio in % 35.1 34.9 .9 Net debt in millions of € 895.5 955.3 .3 Net debt | underlying EBITDA 2.5 2.6

0.0 0.6 1.2 1.8 2.4 3.0 200 400 600 800 1000 Q1-Q4 2014 Q1-Q4 2015 Q1- Q4 2016 Q1-Q4 2017 Q2 2018

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 Division Bioprocess Solutions Division Sartorius Group Operational Setup

• ~ 74% Sartorius AG
• ~ 26% Free float

Sartorius AG

Stock 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 float

Ordinar nary shar hares

• ~ 91% Free float
• ~ 9% Treasury shares

Preference sh shares

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

~€2bn

Sales revenue

~3|4 Organic ~1|4 Acquisitions

Portf tfolio io

• Complementary extensions through alliances

and acquisitions

• Own product development

Regiona ional

• Gain share in North America
• Leverage strong market growth in Asia

Infras astr truct cture ure

• 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

Raine iner r Lehm hmann ann, , CFO

since 2017

Finance, IT, Business Processes

Joachim achim Kreuzb zbur urg, , CEO

since 2003

Corporate Strategy, Legal & Compliance, Operations, Communications, Human Resources

Rein inhar hard Vogt

since 2009

Marketing, Sales & Services

46

Petra Kirchhof hoff

Head of Corporate Communications & IR Phone: +49.551.308.1686 E-mail: petra.kirchhoff@sartorius.com Sartorius Corporate Administration GmbH Otto-Brenner-Straße 20 37079 Goettingen, Germany www.sartorius.com

Financial calendar and contacts

47

Ben Orzelek

Head of Investor Relations Phone: +49.551.308.1668 E-mail: ben.orzelek@sartorius.com

• Octob

tober r 11, , 2018 SdK Private Investors Event | Rendsburg

• Octob

tober r 31, , 2018 Société Générale Roadshow | Paris

• Nove

vemb mber r 12, , 201 018 HSBC Healthcare Day | Frankfurt

• Janu

nuar ary y 10-11, , 2018 Oddo Midcap Conference | Lyon