Pall's pre-tax profits fell slightly in the third quarter of 2006 but its Biopharmaceuticals division has once again performed strongly, so speculation is rife as to whether it will escape an announced 10 per cent reduction of the filtration and separations giant's global manufacturing workforce.
The US company said its most pressing challenge is to reduce cost of sales and drive gross margin improvement across all businesses after its pre-tax profit dipped from $56.6m (€45m) in Q3 of 2005 to $54.3m in Q3 of 2006. Aerospace, Medical and General Industrial are all segments that occurred losses, while Microelectronics, whose sales where up 36.5 per cent and Biopharmaceuticals, up 18 per cent, were the only bearers of good news.
In response to rising raw materials and transport prices, the company is implementing a cost-cutting programme with a significant facilities reduction effort, better procurement and sales discipline for it systems business, and streamlining of operations, particularly in lower-growth regions.
This programme is expected to deliver savings of $20m this fiscal year and $40m a year starting in 2008, when its full effects will be felt.
Ken Frank, president of Pall's Biopharmaceuticals division, would not reveal how this drive for savings would affect his segment, but hinted to In-PharmaTechnologist.com that Pall is "constantly looking at its infrastructure and how it operates to ensure that it meets and anticipates the market and customer needs and that it acts on it accordingly."
"Sterile liquid and air filters have performed very well, as have capsule filters in all categories," he said.
"All regions showed good growth but the USA is still the main driver due to the increased amount of large scale biotech production, while the global market is also responding positively to our total fluid management approach including providing integrated systems."
With a 26 per cent profit margin, Biopharmaceuticals has been held up as a segment likely to drive long-term growth at the company, given the high number of biologic drugs coming through to market at present and in the future.
Growth in the division is being driven by increased large volume biotech production for monoclonal antibody products and increased vaccine production, as well as investment in new capacity in both of these markets.
Asked about possible price increases, Frank said Pall is "always reviewing its price structure to ensure that it receives the appropriate value for its products and that its products and services are adding value to its customers."
As part of its strategy to be a total solution provider for the biopharma industry, Pall last year acquired Euroflow, which makes pilot- and production-scale chromatography columns for the biotechnology industry, while in 2004 it acquired Biosepra, a division of Cirphegen specialising in protein purification technologies.