Pall buoyed by biopharma, Asian markets in 2Q

By Phil Taylor

- Last updated on GMT

Related tags: Pall, United states dollar, Biotechnology

Pall seems to have shaken off the financial turmoil of recent
months in the second quarter of 2008, with a 15 per cent hike in
sales to $626m helped by favourable dollar exchange rates and a
strong performance by its biopharmaceuticals division.

"It has been eight months since management discovered and reported that Pall had understated its income tax provisions and payments in several prior periods,"​ said Eric Krasnoff, Pall's chairman and CEO, in a conference call. "We are pleased that the restatement process is behind us.​" Pall biopharmaceuticals gave Krasnoff something else to smile about in the second quarter, with local currency sales up over 20 per cent to $120m. Six-month growth was 15 per cent, which he said was "well ahead of our original expectation of high single digit growth for the year​." He predicted a slowdown in the second half of the year, however, as Pall has already seen production cutbacks at a few major biotech accounts in the US. That said, the impact on revenues has been more than offset by strong systems sales and end-user demand for consumables, particularly in European biotech and vaccine production markets where consumables sales rose by double-digits. The systems business in biopharmaceuticals tripled in the quarter to 15 per cent of total biopharma sales "The key here is that customers are investing and they're choosing Pall equipment for their factories. In this industry, every million dollars that we can sell eventually results in a $300,000 a year consumable payback when it goes into full production and at much higher margins​," said Krasnoff. "We're seeing more strength than expected in biopharmaceuticals. If that continues, then life science may well do more than what we are projecting​" for 2008, he continued. Aside from the strong performance in vaccines, Pall is also reaping the benefits of a push into single-use disposable formats, either full systems with bags or just disposable cartridges with a plastic housing. The company extended its range of disposables at last week's Interphex show in Philadelphia, US, with the launch of new large-scale biocontainers in its Allegro range with capacities up to 500 litres or more. "I think we've positioned ourselves right for the current phase of the market​," said Krasnoff. The other major element in Pall's life sciences business, Pall medical, grew by low single digits in the first half but is expected to show a downturn for the full year, mainly as a result of weakness in the blood thinner part of the business. Overall, the life science unit saw operating profit increase 30 per cent to $48m, with margins improving to 19.7 per cent from 17.5 per cent last year. Asian investment paying off ​ Asia was a big driver for Pall in the quarter, with system sales up 40 per cent, mainly in the firm's industrials division. "The Asian economy in particular shows no signs of slowing​," said Lisa McDermott, Pall's chief financial officer, in a conference call. "Continued investment in emerging markets is a key factor in driving sales​," she added. Pall is tapping into that growth by opening a life science validation centre for biotech and pharmaceuticals in Bangalore, India, last year in Bangalore, and last month opened a similar centre in China. "We're continuing to invest heavily throughout the region​," concluded Krasnoff.

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