Earnings Call: Q3 2021

Oct 20, 2021

Good day, and welcome to the Sartorius and Sartorius Stedim Biotech Conference Call on the 9 Months 2021 Results. Today's conference is being recorded. At this time, I would like to turn the conference over to Doctor. Jochen Kreuzberg, CEO. Please go ahead. Thank you very much, And good day, everybody. Welcome to our conference call on our 9 months results for 2021 for both the Sartorius Group as well as for The Sartorius Stedel Biotech Group. We would like to kick it off by walking you through the Sartorius AG, Sartorius Group's numbers first and then directly after that through the results for Sartorius' Edin Biotech, and then we open the line for Q and A. Before I hand over to Rainer, our CFO, I would like to just highlight the most important Our results of the 1st 9 months in 2021, both divisions continue to have very To show very dynamic double digit growth in both order intake as well as sales revenue, pretty much as expected, I would say, in Q3 then in particular as well. Over proportionate increase in earnings, you will see the numbers in detail in a minute. What is important for us to line out and To underline, and Reiner will lay that out in more detail also later on, is that we have seen strong Core growth, that means organic growth, nonrelated to the pandemic in both divisions. On top of that, then, We have seen significant momentum from pandemic related demand as well as a positive development of the acquisitions that we have closed during the last 12 months or so, 1.5 years actually. We also have closed an acquisition, a small acquisition during the last couple of And that has been the one of the company Xcel from Germany. It's a specialist for cell culture media, Very much focused and specialized on those for advanced therapies as well as vaccines. One slide on that later on in the presentation as well. And we confirm the forecast for the full year of 2021, which we have raised substantially 3 months ago. And with that, I would like to hand over to Rainer. Thanks, Joachim, and also welcome everybody from my side. So let's have a look at 9 months' figures. It's pretty much a continuation of H1. Sales revenues rose to SEK 2,530,000,000 In constant currencies, that's an increase of 54%. Out of those, 6 percentage points are actually attributed to acquisitions. 21 percentage points we attribute to the pandemic, to the corona pandemic effect and 27% It's really the strong core growth that Joachim just pointed out overall for the group. Order intake rose to SEK 3 point €9,000,000,000 increase of 72% in constant currencies. Here, the corona impact we attribute 70 7.3 percent, which then translates into an EBITDA margin of 34.3 Increase of 5.2 percentage points compared to previous year, driven, of course, the increase of economies of scale and still lower than normal cost base. I'm actually going to talk about that when we dive into the divisional EBITDA numbers and give a bit more color to that development. When we're looking at the geographical Split of the sales revenue. We really see across all three regions very solid performance, Plusminus around 50%. Let's start on the left hand side with the Americas. Revenues Amounts to €825,000,000 increase of almost 50% compared to previous year 9 months, really solid performance here on the bioprocess side. And on the LPS side, also solid performance in both segments, LE and Bioanalytics. But of course, here also let's keep in mind Last year, we acquired the Life Science assets from Danaher. So this had an over proportionate impact on the LPS side And fuel debt development in the Americas. In EMEA, revenue amounted to €1,040,000,000 An increase of almost 55%. BPS here, of course, still a tailwind from the vaccine manufacturers, but also on the LPS side, Specifically in both segments, LES, by the way, strong organic growth. Asia Pacific, Also very nice performance compared to previous year, euros 663,000,000 almost an increase of 58.5%. LPS, though, let's keep in mind, had a tougher comparable last year, and we see here a very good recovery In both segments as well and BPS continues to be on a strong growth path. On the regional distribution, really compared to the previous quarter, No significant change. EMEA, still the strongest region, was 41%, followed by the Americas with 33% and Asia Pacific rounds it up with 26%. If we look now a little bit closer on the BPS development, It's a great picture overall. Let me start on the left hand side with the order intake, which rose by 81.5 Percentage points almost to SEK 2,700,000,000 Therefore, of that actually 8 percentage points are from acquisitions. The corona impact here, we attribute to be 24%, which really leaves The rest is a strong core organic business of 50%. Of course, here, let's keep in mind that these are not market growth rates. So it's really We attribute that development to a still continued change in order patterning from some of our customers. On the sales side, in the middle of the slide, we see the development of sales revenue. BPF Almost scratched the €2,000,000,000 figure with €1,990,000,000 an increase of almost 58% in constant currencies. Acquisition only factored in a minor point, around 5 percentage points. The corona effect, roughly 25% And the organic, so therefore, really strong core performance at 28%. I want to continue to point out, of course, the spread between order intake and sales revenue. This is really, as of now, €750,000,000 So really a strong order book that we still have. But The book to bill ratio actually also slightly on a decreasing way. The strong performance On the sales revenue, as I point out on a group level, of course, specifically driven by the bioprocessing side, We have here an increase of our margin from 31.9% last year to 36.5 Aperitin or resulting in €724,400,000 Here, I actually want to point out a little bit. Yes, we have economies of sales. We are focusing a lot On lean manufacturing, on really optimizing our processes, on really squeezing out our factories and creating additional capacity. But what we also need to keep in mind, and we had it on the last quarter call, the chart of the headcount development and the under proportionate increase, If we dissect that a little bit on the bioprocessing side, on the 1st 9 months, we actually hired 2,100 headcounts. Out of that, 40% roughly, for example, were direct labor. So really attributed to the margins. That means that the rest Was for the functional expenses. And out of those 2,100 in Q3, we almost hired 900. My point is here that we're seeing an increase specifically in Q3 and towards the end of Q3 in our Cost base, which of course will have an impact going forward. Our cost base will increase and we are already seeing the first impact. Since all of that happened towards more the end of Q3, it's not fully reflected yet in the full quarter. But let's please keep that in mind. We'll also be I'm sure you often will refer to that later on when he talks about the guidance. When we look at LPS, Here, very nice performance against moderate prior year comps. So let's start again with the order intake, Which amounted to €553,200,000 increase of 38.3 percent. Acquisitions here played around 7 percentage points. The corona impact was roughly as well 7 percentage points. So the organic growth was 25%, very happy To see that and was, of course, fueled also by the good momentum that we have With our biological instrument portfolio. On the sales side, We basically increased revenues by almost 41% in constant currencies to EUR 540,000,000. M and A contributed 9 percentage points. Corona, as on the order intake side, around 7 percentage points. So it's solid organic growth of 25 And here we say order intake translates fairly quickly as always into the revenue. Underlying EBITDA was €141,000,000 or almost €142,000,000 an increase of 81.4 percent. Very happy translate into margin of 26.3 percent. Of course, here, one impact the economies of scale that we have, but also really a favorable product mix On the BioA side and also on this side, but not as extreme as on the bioprocessing, still an under proportionate cost development In the functional areas and here also on the sales and distribution side. If we come to the next slide and look at some Financial key performance indicators, of course, driven by the strong group EBITDA, underlying EBITDA of EUR 866,000,000 And that translated in a very solid operating cash flow of SEK635,600,000 increase of 67 percent despite the continuation of the increase of our working capital. Extraordinary items, we actually could decrease Compared to previous years, you know, here we basically only show some corporate activities mainly driven by M and A. The financial result, Just want to point it out, of course, comprised of classical interest expense. But in this case, since the acquisition of beer separations, of course, We have also certain volatility regarding the valuation of the earnout liability that attributed roughly here €55,000,000 Underlying net profit is strong, showing at €406,900,000 increase of 92.7 percent and reported net profit Almost doubled to €295,400,000 Investing cash flow here. You see, Ryan, €392,600,000 Of course, it does not translate to the CapEx ratio below, which is 9.6%. In the investing cash flow, we are showing also the 2 acquisitions, Celgenex, which we basically made closed right early in July and Xcel, which Which Jafin is going to talk about a little later as well in the Q3 there, we basically roughly spent together EUR 150,000,000 €150,000,000 If we're looking at the next slide, standard quickly going over the Equity ratio at 30.2 percent at a very solid level. Nevertheless, let's keep in mind here Actually compared to previous year, we increased our balance sheet sum by SEK 1,000,000,000 Roughly 50% is attributed to increase of inventory and receivables as well as a lot or a substantial cash balance that we're showing in Q3. And of course, the other half is related to the assets of the acquisitions that we got on board. So therefore, still of course strong equity ratio, But also with a quite substantial increase of our balance sheet sum. Strong net cash flow, of course, allowed us to pay down some debt Compared to the end of last year, euros 110,000,000 less. So it's at €1,780,000,000 which translates in on an indebtedness Ratio of 1.6, which I'm very happy to see going forward. And With that, I'll pass back to Joachim. Thank you, Rainer. Yes, I now would like to briefly talk about the acquisition of Shell, which we have closed end of July this year, it's a company that is specialized On cell culture media, certain supplements also to cell culture media, very much media that is Of particular use and differentiation in an area of viral vector manufacturing. Virovectors, as you know, Our one technology platform for the production of certain vaccines, but also for gene therapies very much. So that's one aspect why this is very complementary to our portfolio and also of strategic relevance. And the other one is that this Helps us to accelerate the establishment of a global manufacturing platform. I'm sure you are aware of the We acquired Biological Industries based in Israel. A while ago, we back then announced that we would start A significant investment into an old manufacturing capacity for cell culture media for North America based in our facility in Yauco, Puerto Rico, Which is one of our ongoing investments at the moment. And because of the fact that Xcel has just taken into operation a Really state of the art facility in Bielefeld in Germany with Quite some idle capacity, so which represents a great base also for further growth. This is really a great fit also in that regard. Again, as I said, closed in July. Limited revenue so far, around €5,000,000 for 2021, very profitable, And therefore, we believe a really great and complementary addition. I now would like to talk about the Forecast for 2021, as said at the beginning, we confirm the outlook that we have raised substantially 3 months ago. What it basically says, in other words, is that we expect a 4th quarter pretty much on the same level as the 3rd quarter. And that holds true pretty much for both divisions. So and then translated into growth numbers, we expect approximately 50% top line growth for Bioprocess Solutions and 30% approximately for Lab Products and Services. We see the contribution from acquisitions to be around 4 percentage points for BPS and 6 percentage points for LPS. These numbers are slightly lower than those after 9 months simply because of the timing, yes, because we had 4 months in 2019 where this hasn't The main part of this acquired business, which is are the businesses that we acquired from Danaher haven't been consolidated. So this portion simply becomes a little bit diluted, so to say, mathematically diluted. And then you can also see that the corona demand driven Contribution we expect also to be slightly below the number after 9 months, which basically has to do with the base effect. Q4 last year already was a strong quarter. So again, pretty much maybe more a mathematical Aspect, and therefore, maybe the perspective to take is Q4 pretty much to be expected around the number of Q3. Then the translation into profitability is 26% for LPS and 36% for BPS. Rainer touched upon that topic earlier Regarding the in the end, a timing effect in regards to the buildup of certain costs and then, of course, The fact that travel expenses, etcetera, are just about to rise again, and I'm sure you are having same discussions, getting same presentations from many Companies in these days, I don't want to repeat the numbers that Rainer already shared with you regarding head It's really significant, particularly now in the non manufacturing areas as we said that we would execute on. And yes, that is what is happening pretty much in line with what we are planning. For the group, that translates into Approximately 45 percent top line growth for the full year and 34% underlying EBITDA margin. CapEx ratio Expected to come in around the 12%. Net debt to underlying EBITDA is slightly below 2.0 percent, so no change here as well. So and then I also would like to briefly walk you through the respective results for Sartorius State in Biotech. Again, of course, very much mirroring the results of the bioprocess solutions division, and Rainer has I made quite some extensive comments on that. So sales revenue came in at a good €2,100,000,000 For the 1st 9 months, an increase of 56% in constant currencies order intake, €2,850,000,000 An increase of 78% in constant currencies, own proportionate increase of our underlying EBITDA and therefore, a margin expansion of almost 5 percentage points to 36.3 percent, an even stronger overproportionate increase of our underlying earnings per share, which Are at €5.52 for the 1st 3 months. Then the composition of the top line growth, you You can see in the first bullet point below the table, 24 percentage points pandemic related acquisitions, Around 5 percentage points order intake slightly lower for pandemic, slightly higher for M and A Related and then, of course, again, delaying cost development that has influenced our EBITDA margin. Yes. The geographical distribution of our growth and top line development reflects very much what has been said before. So the fact that EMEA is the strongest growing region has to do with the out proportionate Manufacturing output in Europe for vaccines or the proportionate location of Both originated as well as CDMOs for sure. So that has an influence there. And the rest, I think, we talked about already. Operating cash flow, the same effects regarding The evaluation of earnout elements, for example, Reiner referred to that have a result on the financial results. We have been very extensive in explaining that In our calls before, and I'm sure we'll be giving comments on that, particularly on our annual calls, But whenever there is something to dive deeper. And then, of course, strong driver by the operating cash flow For sure. And on the next page, the financial indicators, the fact that we made acquisitions We are executing on an extensive capacity expansion program, still Net cash flow and the strong profit development, so very solid position here. Of course, also for Sartorius Stilim Biotech, we confirm the forecast for the full year, which has been raised in July. So we expect 48% of top line growth Similarly or again, we expect very much a 4th quarter to come in on the same level as the 3rd quarter. EBITDA margin, we expected 36%. And maybe as I just see it, and Sorry for that. At least on my printout, I think we mixed the numbers for growth by acquisitions and corona demand. It's okay. It has been corrected, so sorry for that. So 4 percentage points and 20 percentage points, respectively. CapEx 12% and net debt to underlying EBITDA is slightly below So and with that, I think we have walked you through All of our slides, and we would be happy to receive your questions now. Ladies and gentlemen, at this time, we will begin the And the first question is from the line of Michael Leuchten from UBS. Please go ahead. Thank you very much. Two questions, please. One, thank you for the detailed comment on the guidance and the implications for Q4. The one variable that Doesn't quite seem to fit. Is the order intake relative to your outline on sales in Q4? I understand what you're saying about The EBIT and the OpEx. So why would that order book not translate into a stronger 4th Quarter, is that capacity related? Are you talking a little bit more of a range? If you have some buffer in that so That variable, if you could try to explain that, that would be great. And then related to that, the second question, if you can, obviously, one of the questions We all try to get our head around this. What's the COVID related demand into 2022? So as you are looking at Your order intake at this point in time, can you comment at all how you think about the tailwind that may be left For 2022, is it are you able to comment? Is it too early? If it is too early, at what point would you think You'd be able to have a view on how long we will see COVID revenues be meaningful. Thank you. Yes. Thank you very much for these two questions. So yes, I can absolutely understand Your question regarding order intake. So one key aspect here indeed is what we, I think pointed out in our previous calls that we have seen this change in ordering pattern By customers, so customers have placed quite a good portion of orders further ahead In time than they have been before. Therefore, we The reason why we expect the 4th quarter pretty much at the same level like the 3rd quarter has to do very much also with the Delivery expectations by our customers. Of course, there are in these There is still certain capacity limitations, and I think that holds true for All the industry, including its supplier base, yes, it's not just, for example, the capacity Constraints that we might have in some areas, but also, of course, when it comes to certain Raw materials or and I think we talked about that last time, sterilization capacities, for example, are Some are constrained in these days and so on, but that is not so much of a problem. So we do not see Any customer of ours who has to delay manufacturing campaigns or so because of that. And we should also Not forget that we are now, I think, pretty much already at, at least, preliminary at a like peak output Of the vaccine manufacturers, which is different to 3 6 months ago, where they are still working very hard On ramping up their outputs. So I would say, as I said, yes, without Not mentioning certain constraints, also stress In and on the supply chain, but it's very much in line with delivery expectations. And then, of course, this is already the bridge to your second question because you rightly say, okay, when will you reduce your order book? I mean, an order book always, of course, has to be seen in relation to the overall business volume, yes? And an order book that we have today Has to see within the perspective of a significantly higher sales revenue level than 2 years ago. So therefore, I think we should not forget that perspective. But nevertheless, we would expect indeed That in the course of 2022, we already will see a good portion of normalization. What exactly that might mean, to be honest, that's really difficult. As you anticipated when you said, okay, in how far We will be able to answer that. So the scenario that we believe is Quite likely maybe from today's perspective is that we will see approximately the same level of Business, particularly related to vaccine manufacturing, which is the largest by far the largest part of pandemic related business that we have today. In 2022, like in 2021. And that, of course, is to quite some extent based On the agreements that have been closed between vaccine manufacturers and the governance of Governments of several countries. And then, of course, behind that very often are certain vaccination, Yes, suggestions and approvals. So and then, of course, one thing that is still very much a moving Yes, not target, but the moving and changing situation is the That's those parts of the population for which booster shots are suggested, We see that now moving down the age pyramid, and that will have an effect for sure, like other Variables will have also an effect. So that's very much what we believe is probably the best Assumption, the best framework For a projection into next year, please don't translate this now 1 to 1 into a guidance For 2022, yes? We will be trying to do our best and give much more visibility and a range for our growth expectation For 2022, when we publish our preliminary results for 2021, which will be the case end of January next year. But as you are asking for this bucket, which is pandemic related, then this would be our current thinking. Thank you. Very helpful. The next question is from the line of Paul Knight from KeyBanc Capital Markets. Please go ahead. Hi, Joakim. A couple of questions. Number 1, what size will the media business be and you're In a run rate in 2022? And then secondly, as you look at industry production Expansion from your customers, do you when do you think we reach Adequate supply or you worry about industry capacity, is it 23, 24, 25? If you could talk to those 2 issues, I appreciate it. Paul, could you Help me in understanding the second question a little bit better. What do you mean by capacity investments of our customers and With the aspect that we might be worrying about. Yes, contract manufacturers are significantly expanding capacity that doesn't really come online Until 'twenty three, 'twenty four. Is it possible to say there is a higher risk Go over capacity in manufacturing in 'twenty four or can you even guess on that possibility? Okay. I think we have seen a lot of capacity expansions Taking place also during the pandemic, I would say. And as far as we see Our capacity expansions that have been made by contract manufacturers, for example, but also by others, Given the fact that we are talking about single use technologies to a large extent, they are Flexible to some degree. So I wouldn't expect any capacity constraint or anything like that Within the next couple of years, wouldn't see any reason in regards To, let's say, the installed infrastructure. Again, I believe that A full normalization also in regards to a certain relaxation of supply chains probably. I would say that might take another year or so. But that's a different topic. That's not the installed capacity or anything like that. It's really more the aspect that I tried to elaborate on a minute ago already. So and for the Media business in 2022, We expect that to grow into something close to €100,000,000 The next question is from the line of Daniel Vandorff from ODDO BHF. Please go ahead. Good afternoon, and thanks for taking my questions. Maybe one follow-up question on the questions before. So When you think of equipment orders going into 2022, 2023 and assuming that eventually the pandemic It will be over maybe after the winter season on the Northern Hemisphere. How should we think about this going forward? So do you see Any changes there given the installed equipment base? That would be my first question. And maybe a bigger picture question. When you think of account logistics problems Around supply chains globally, which has also helped your business according to my understanding. Now for you as an ordering Company for components and material, has this had any impact? Or do you see any risks there for your business over the next 3 to 6 months? That would be my second question. And my last question, you touched upon this in your presentation, the margin development over the next few quarters Also in light of your hiring policy and Your plans for hiring people over the course of the next 3 to 12 months, how should we think about margin development, Not just for Q4, but also beyond. So is that sort of, at one point in time, a steeper decline? Or is that really gradual Flattening out and maybe given the changed composition of revenues now, is there a margin level You think we'll not be surpassed to the downside anymore? Thank you. Yes. Thank you for these three questions. So we would see and expect When we look on 20222023 regarding maybe the mix of Equipment and consumables, a single use business, if I got your first question right, then yes, then we would expect A certain shift towards single use. When we take Just the vaccine manufacturing, then of course, there has been also a little bit more equipment business at the beginning While capacities have been installed, then also the ramp up has been having some impact on that. And then now when it is about a continuous operation in such facilities, Then of course, there's less of the equipment business. But as you might have seen over the last years With such various, the change of equipment business versus our consumables business Isn't that significant year on year? Simply because we still see A very substantial underlying growth in our markets and therefore, a continuous underlying need for additional capacities. Of course, there are always certain fluctuations. We have seen that in the past. It's never a straight line. But we wouldn't See any fundamental change here, and that is also why we don't report this number quarter on quarter because it would really Draw the attention on a wrong or from a wrong angle On our business, so long story short, within the vaccine manufacturing arena, a bit more towards consumables overall, no big change. Logistics and what that might mean for us. So yes, I think clearly, it's also a challenge In our industry, we are luckily not seeing any situations, as everybody is aware of, in the car industry, for instance, where Entire sites are closed for 2 weeks or something like that because of the shortage of microchips. This is not the case for us, but it's a challenge. And sometimes, it's certain Raw material, for example, certain plastic resins, then the sterilization capacities are a topic That is also partially known in the broad public domain. So and therefore, Can we exclude that this will remain a certain stress factor going forward? No. Are we optimistic that we will continuously being able to manage it as we have been during the last couple of months? Yes. But I would definitely say, as I think I said a minute ago already, we believe that this normalization will Easily, need another 4 or 5 quarters. So until end of 2022 would be our best guess so far. Margins. So we will give a guidance For 2022, beginning of next year, so end of January most likely. So then we can talk about that a little bit more in a tangible way. But as you were Asking for, okay, will there be a decline? Will it rather be flattening out? So it will be rather a flattening out Scenario because we the fundamental aspect of our business is that we have very healthy Economies of scale, very healthy incremental gross margins. And of course, in a scenario as we are in at the moment where a good portion of our Our capacities are under full utilization. Then the incremental margins are not that high. Once we have fully executed our capacity expansions, we can then rather Use, yes, certain free capacities for further growth, then of course, this looks a little bit differently again. So therefore, We believe that even though we are building up Yes. Our workforce very significantly at the moment, this there is no fundamental change in regards to our business And what we should really keep in mind what we are talking about is that we are running significantly ahead of schedule in regards to our margin development. So and now we are running ahead, and we might see a flattening out there, but please, the right baseline is What would have been the development in a more normal, I. E, without corona Base scenario, yes? And so long story short, no change here in regards to, I would say, the mechanisms Of our business model. Yes. Thank you. The next question is from the line of Richard Foster from JPMorgan. Please go ahead. Thanks for taking my questions. A couple Let me just go on, let me just get an update on the regulatory process, how that's pressing for that transaction. Second question, just on the COVID-nineteen contribution in Q3. It seems like that was a Sequential decline in your guidance implies an increase to maybe around €200,000,000 in for BPS in the 4th quarter. Richard, no, we lost you. So we will go ahead with the next question. The next Question is from the line of Falko Friedrich from Deutsche Bank. Please go ahead. Yes. Maybe sorry, sorry. Just one second, Mr. Friedrich. So as far as we got that, there was one question regarding an acquisition That we have announced already quite a while ago, and that is the acquisition of Novocept, where we said that this will be subject of an FTC approval Or an FTC approval process, we should say. This process is still ongoing. We would expect a decision Before the end of the year, and of course, we will communicate to the market once we know this decision. So far, no news. And the second question, I don't know Whether Paul still is with us, at least that he can listen to us. But the I think what was missing here, the missing link might be the base effect regarding the fact that we already had some corona related business In our books in Q4 of last year. So therefore, there is no decline also of that business, absolutely not the case. It's really just that the baseline is a different one. So sorry, yes, I hope that was helpful for whomever was able To listen to that now. So Mr. Friederik, sorry for interrupting you. No problem. Thank you for taking my Questions. I have 3, please. The first one, following up on Daniel's previous Question, just making sure I understood it correctly on the 2022 margin. So you said that you expect a Flattening out in 'twenty two from the 'twenty one level. So we're talking about the 34% Margin guidance for 2021, so you would expect at least a similar level next year. Just Making sure I understood that correctly. Then second question on CapEx. You're trending a little bit below your guidance So should we expect a significant increase now in Q4? Or is it likely that you're shifting some of these investments into the next year? And then the third question On the Bioanalytics business, which you highlighted again in your prepared remarks, can you just update us on the absolute size of that business And by now, the growth rates and the profitability level compared to your group margins? Thank you. Sure. Yes, thanks for these three questions. So Yes. Oh, shall I answer the first one? So Yes. We will give our guidance for full year 2022 in a little bit more than 3 months' time. And I would really like to ask you to bear with us until then before we really talk about numbers. However, what I said when the answer the question was raised before Going into a direction of okay, will we see a decline of margins rather flattening out? I said that will be rather flattening out. But please, again, let's give us the time for being more precise In that regard, on CapEx, yes, basically, we have seen, I guess, also In previous years, depending, of course, on the specific investments and capacity expansions that we are investing in, That the CapEx ratio and the capital expenditure, absolute numbers It's showing a bit of peak in the Q4, and we expect the same this year. However, in such larger undertakings, It's sometimes indeed the case that when it comes to the because it's in the end, it's about when is the point in time that it is cash effective. It depends also on when do you receive A certain invoice, when do you approve a certain bit of That has been built to be finished and quality wise approved. So therefore, there might be also a certain shift. But We confirmed our guidance because we believe that this should be pretty much the number that we come in by end of The year, we are seeing for the BioA business A very healthy top line growth. We believe it should be A bit above the average growth in our LPS division, And we expect that business to account for between €200,000,000 €250,000,000 for the year 2021. Okay, great. Thank you. And maybe briefly on the profitability level of the Oh yes, sorry. Profitability is above Average as well as is the growth rate. Yes. It's a very profitable business, very healthy gross margins, And a good portion of that is hitting the EBITDA line. Excellent. Thank you. The next question is from the line of Hugo Solvedt from Exane PNB Paribas. Please go ahead. Hi. Hello. Thanks for taking my questions. I have 3. 1, brief one on the order intake, especially the organic growth of order intake. Can you maybe share the mix of use of the equipment and products either for cell engine therapies, Biologics or Potentially a marginal part for Small Molecules, I'm interested to hear more in the evolution of the mix within your under intakes Over the past 12, 18 months, what has been the trend? 2nd, On the €10,000,000,000 fire power that you highlighted at your recent Capital Market Day, just curious, so should we think about the deployment Of those €10,000,000,000 and the time lines for it, should we think about more bolt on technological deals or more transformative deals that you're thinking about? And last one, on the recent change in control of the part of the family stake in the ordinary Yifuting shares, What signals should we understand from this move? And is there actually a possibility that the testament expected to lapse in 2020 28 Yes. Thank you for the question, Hugo. So Order intake, that's honestly a little bit beyond the level of detail That we would like to share pretty much in the public domain in at least quantitatively. So what we can say from a qualitative standpoint, maybe just to start from the end of the order of that you have managed Mentioned small molecules don't play a very significant role on our end. Of course, you always have some sterile filtration So in such processes, but that's not having a major impact. And then monoclonal antibodies Are still the dominating type of molecules, the Dominating modality, as some people would say, and we believe this will remain being the dominant modality for the next 5 years and probably even beyond, yes, because it's still growing and it is so big and it's still also dominating the pipeline of our customers. So therefore, there is no reason really to assume that this is changing too quickly, even though A lot of people, of course, are at the moment talking about mRNA, for instance, etcetera, yes? But this It's clearly very unlikely that this will be a dominating modality within the next couple of years. However, We do indeed see that cell therapies, gene therapies are showing above average growth rates. It's still as there are not too many approved drugs out there, It's still the case that, of course, such growth rates are also fluctuating very strongly as partially the manufacturing campaigns, their customers are even fluctuating. And the investments of such customers are not the same all through our different quarters or even years. So but that's normal for an early phase, yes? But again, qualitatively, We see that playing an increasing role. Very much also, you can mirror that in Through our investments that we are making into the space, take beer separations. I talked about XL today and so on. Firepower, yes, we have significant firepower for M and A. We, of course, We consider ourselves also to be in a position making a more transformative But we have to be realistic. There are not too many opportunities in the industry that are a good fit to our strategy, and that's A must. We are not interested in doing something that is just big or so, but not really matching Fitting to our strategy. So therefore, it can maybe still rather be maybe A chain of pearls, so to say, than a transformative deal. Let's see. And the fact that we communicated on the Change of the internal composition of the joint airship had to do with the fact that we had to communicate that simply because of any First of all, by the parties that are part of such transaction, but then also the company of which The shares are hold by this shareholder. And But clearly, this transaction will not have any impact on the strategy, the management And how we operate and the direction of the company at all. And this will be the case until mid of 2028. So that has no impact also on how the joint airship works And the role of the executor and whatever. All this remains completely unchanged. It's just a The next question is from the line of Scott Barrow from Berenberg. Please go ahead. Yes. Thanks very much for taking my questions. Good afternoon. Yes. So first question, please. Just a clarification on some of your comments about the Q4, where I think you said you're expecting a similar number in Q4 to Q3. And I just maybe there's a problem with the Berenberg calculator. But if you deliver that number, All of this 898 number or so, it seems to me that that's 5%, 6% ahead of your current 45% Constant currency guidance or put the other way that to meet your guidance, I think implies €100,000,000 or so sequential Reduction in revenue. So I just wanted to make sure I understood the messaging around the delivery this year, please. The second question, very much appreciate your comments on COVID demand. I appreciate Uncertain and any clarity here appreciated. But again, if one assumes then that they say €500,000,000 of COVID contribution that I think you called out last quarter, by and large persists into next year. And if one assumes that the underlying trend for Bioprocess hasn't really changed, and one would argue that your order book Supportive of that. Am I right in suggesting that indeed next year we could be in again a low teens type bioprocess Growth scenario for Sartorius. So I wonder if you could at least help me distance or pick away at the logic And I guess last and final linked question. Obviously, Doctor. Kory spoke, it's been some Phenomenal years for Sartorius. And of course, you've raised guidance on several occasions. What is it You need to see to increase your midterm guidance further given that your order dynamic growth and margin are all currently Sure. Yes. Thanks, Scott. So I would say that if Q4 indeed comes in on the same level as Q3. We might see or then we would see growth numbers A little bit higher than, for instance, the 50% for BPS, But we will not see 5 to 6 percentage points on a group's level. There will be a little less than that. So and that is, I mean, yes, we say approx 50% for BPS. We say approx 45% for the group. We say approx 30% For LPS, so we think we are well on track to achieve that. We might overachieve it slightly. But what I clearly would like also to point out here is and we touched upon that earlier When the question was, okay, what will be the driver? And I said, well, the main driver is the delivery expectation by our customers. And when a customer says, well, you know what, I need that best on the 10th January, then we won't Drop it in front of his door on the 30th December, just to make the numbers or whatever, yes? So we will see that How that exactly will play out towards the end of the year? I think we give a lot of visibility through our order intake reporting. So I think we are well set to, yes, at least achieve the numbers that we have in there. Yes. Now you said I should help you in In answering the question regarding the low teens BPS growth rate next year, and I think, unfortunately, I can't. Yes, I really would like to give That guidance, as I said, end of January next year, when I think all of you also will have a base For that growth rate, which is the 2021 numbers that we then have been published or will publish on the same day, And I think that's really in the interest of everybody to also avoid any misunderstanding and speculation to handle it that way. Midterm guidance, Scott, that's a good question and a good reminder. I think we said that in July already that we We'll take a look on our midterm guidance also around these months now When we define the targets for 2022, I will make a statement on our midterm Outlook as well. And I think you have a point. You said, yes, growth, but margins. And I think maybe margins It's more of a topic than growth rate given the very specific significant extraordinary business that we have in there. And As a reminder for everybody, we said that and so far, we would stick to that, that for 2025, our assumption is and I'm not talking about A great a perfect crystal ball that we have, yes, we don't have that at all. But our assumption for 2025 is That there will be no corona related additional business. So that we have to take please keep in mind that would be our current thinking, And we will be very transparent when we talk about 25 in January. Very clear. Thank you very much indeed. We have a follow-up question from Michael Larsen from UBS. Please go ahead. Thank you very much for taking my follow-up. Just going back to your comment about the capacity not being a I think there's been some debate on whether the COVID pandemic has allowed competition to maybe catch A little bit more share in the earlier customer base, maybe specifically in China. Is it fair to say that As your capacity commentary suggested that isn't a squeeze anymore, that risk is going away? Or is that something that Has opened the door, and we should keep that in mind as we think about the structure of the industry over the next, I don't know, 5 years or so. It's I thought it is an easier to answer question before you said 5 years Because on the current dynamics, I would say it's rather neutral Because everybody was facing pretty much the same constraints, we think we were doing Quite well, rather above average maybe in our competitive landscape, particularly maybe for the first Phase of the pandemic, in managing our supply chains, ramping up capacities, etcetera, etcetera. But overall, I would say it didn't change much of the market shares or so for all the reasons that we know in our industry. So And that is what we would see also now for the next couple of quarters. Everybody is investing significantly, making sure that sufficient capacities are available going forward. So no big difference between the different plays, I would say, currently. When you ask for 5 years, Michael, then it becomes really more difficult, yes, because particularly, as you mentioned, China, because there I mean, we do know The massive global competition between the U. S. And China pretty much in each and every market, And I believe that's a bit too early to make any educated statement on that. That will be a topic that hasn't played much of a role so far, but I would imagine that it plays Some role within the next 5 years, but it's really difficult to tell. I mean, we have a competitive landscape with players, To some extent, from the U. S, to some extent, already with some footprint in China and so on and so forth. So we really have to see how that evolves, and I'm sure we'll talk about that also going forward. Thank you. Yes. Good. Yes, I think there is as far as we see the tracker here, Nobody left in the queue for questions. Let me take the opportunity to again thank you for your interest In Sartorius and Sartorius stayed in Biotech and the questions and the discussion that we could have about that, I hope we were able to answer your questions In a helpful way. We are wishing you all the very best. Stay safe. Looking very Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.