French diagnostic and testing group Eurofins is scouting for acquisitions in Asia and the sphere of genetic diagnostics because it seeks new alternatives after a pandemic-related gross sales increase.
“The most interesting market is Asia,” stated chief govt Gilles Martin. “Access to tests is not very developed there yet.”
Boosted by a worldwide surge in testing, Eurofins entered France’s CAC40 index final yr. But because the pandemic receded, it was hit by falling demand as governments scrapped well being and journey restrictions.
After two years of double-digit development fuelled largely by the Covid-19 pandemic, analysts count on stagnating annual income of about €6.7bn this yr, in response to Refinitiv knowledge. Shares are down greater than 40 per cent this yr to about €63, half their peak in September 2021. The firm introduced final week that it will purchase again as much as 2 per cent of its shares over the following yr.
Martin, who based the corporate in 1987 however expanded into medical diagnostics solely seven years in the past, plans to additional construct this a part of the enterprise by replicating the acquisition technique that took Eurofins from a small French laboratory to a number one meals, pharmaceutical and environmental testing participant.
Eurofins spent €197mn shopping for 33 corporations within the first half of this yr — greater than twice the quantity it allotted to acquisitions on the similar time final yr. The group purchased the Japanese prenatal genetic evaluation group Genetic Lab final December and is on the hunt for related targets.
Martin, an engineer with a PhD in synthetic intelligence, believes genetic evaluation and engineering will permit the event of many new exams over the following 20 years. The group can be involved in personalised drugs.
“More and more people see their health as their capital which they want to preserve and learn about [by] documenting themselves,” stated Martin.
Eurofins stated the US was the primary massive marketplace for genetic diagnostics, similar to prenatal exams that detect foetal genetic abnormalities.
Sales of kidney transplant exams, which additionally use genomics, greater than doubled in North America within the first half of the yr. But relatively than increasing within the US to attempt to compete with testing giants similar to LabCorp and Quest Diagnostics, Eurofins stated it wished to create “new markets through innovation” in Asia.
Although Asia accounts for lower than 10 per cent of group income, it posted the quickest income development within the first half of this yr.
Martin stated he wished Eurofins to increase “everywhere [in Asia] on a big scale except for China where it will be on a small scale”. Chinese corporations had native benefits over international corporations, he added. The authorities additionally restricts international corporations from amassing genetic knowledge on Chinese residents.
In addition to diagnostics, Eurofins plans to increase its meals and environmental testing enterprise in Asia. It has about 100 laboratories within the area, in contrast with about 600 in Europe.
It is already energetic in genomic testing in Europe, the place it performs 150,000 prenatal exams a yr.
The Martin household owns 33 per cent of the enterprise.
Société Générale analysts stated the group would profit from new board members with worldwide expertise. Its present management was additionally “very centralised”, they added. Martin, who heads the corporate’s govt committee can be the performing chair of its board of administrators. His brother — previously the group’s chief know-how officer — is a non-executive board member.
Other analysts have raised questions on succession planning given Martin’s longstanding function — he has been chief since he based the enterprise 35 years in the past. Asked about his plans, Martin stated that Eurofins, which he based by shopping for the rights to his mother and father’ patented wine evaluation know-how, had “very traditional values and of continuity”.
“My children and my brother’s children aspire to be good shareholders, not necessarily executives, but they wish to be shareholders in the long term,” he stated.