bioMérieux : Business Review for the Nine Months Ended September 30, 2013

Regulatory News :

bioMérieux (Paris:BIM), a world leader in the field of in vitro diagnostics, today released its business review for the nine months ended September 30, 2013.

Sales for the first nine months of 2013 amounted to €1,144 million, representing a 3.9% year-on-year increase at constant exchange rates and scope of consolidation. The nine-month figure includes €6 million in R&D-related revenue, following retroactive billing. Excluding this non-recurring revenue, organic growth would have come to 3.3%.

Third-quarter sales totaled €390 million, up 7.4% from the year-earlier period (or 5.7% excluding R&D-related revenue).

⁽¹⁾ Including the Middle East and Africa

"Over the third quarter, bioMérieux sales growth accelerated to 7.4%, lifting nine-month sales growth to 3.3%, or 3.9% including non-recurring R&D-related revenue," said Jean-Luc Belingard, Chairman and Chief Executive Officer. "We pursued the launch of our VIDAS^® 3 immunoassay platform, which is now available in 15 countries, and marketed a number of innovative new reagents, including a VIDAS^® test for measuring vitamin D levels. Thanks to this good performance, we can confirm our organic growth objective for 2013 despite the high basis of comparison in the fourth quarter. During the period, we also entered into an agreement to acquire BioFire Diagnostics, Inc., a privately held U.S.-based company that markets a unique proprietary molecular biology solution for diagnosing infectious diseases, and successfully carried out our first bond issue, in an amount of €300 million. Backed by these advances, we are focused more than ever on executing our strategy."

SALES

Organic growth came to 7.4% in the third quarter, driven by the continued uptrend in sales, which rose by 5.7%. Organic growth also reflected non-recurring R&D-related revenue (clinical trial and success fees from co-development of companion tests), in an amount of €6 million. During the quarter, all regions reported higher sales on an organic basis. Growth was particularly strong in North America at 11.3% - the highest increase since 2008 - and in certain emerging markets, such as China (up 18%). Growth in euros came to 1.9%, impacted by the depreciation of certain emerging market currencies (the Indian rupee and the Brazilian real in particular).

bioMérieux is closely watching the monetary environment in emerging markets and adapting its sales strategy whenever possible. As of September 30, 2013, emerging markets accounted for 29% of consolidated sales and reported organic growth of more than 10%.

At constant exchange rates and scope of consolidation, nine-month 2013 sales may be analyzed by region as follows:

• Sales in Europe - Middle East - Africa (51% of the consolidated total) were stable over the first nine months, albeit with an improvement of close to 2% in the third quarter.
  • Sales in Western Europe (43% of the consolidated total) edged up slightly during the third quarter, confirming the encouraging signs seen in the second quarter. Sales of industrial applications confirmed their strong trend, expansion in Germany continued (+5%) and business in the United Kingdom returned to solid growth. Nevertheless, the region’s sales were still down over the nine-month period, notably in France and Southern Europe.
  • In Turkey, Russia, Eastern Europe, the Middle East and Africa, nine-month sales were up 10%. During the third quarter, growth was impacted by high 2012 comparatives and by political and economic instability in Turkey, the region’s largest subsidiary.
• In North America (23% of the consolidated total), sales were up 5% for the first nine months.
  During the third quarter, the recovery in the United States (excluding bioTheranostics) and Canada accelerated, with sales rising by 10% thanks, in particular, to a favorable basis of comparison with third-quarter 2012. In addition, instrument sales returned to growth after a difficult first half, lifted by initial VITEK^® MS billings and VIDAS^®'s confirmed success in intensive care units.
  
  In clinical applications, the VIDAS^® range saw particularly rapid growth, led by strong demand for the VIDAS^® B.R.A.H.M.S PCT assay. Sales of industrial applications increased by 11%, reflecting TEMPO^®’s very good momentum and the success of the AES Blue Line™ range, as well as robust growth for VITEK^® and ready-to-use media.
• In the Asia-Pacific region (18% of the consolidated total), sales rose 9% over the first nine months. Third-quarter sales were impacted by slower growth in India caused in part by the wait-and-see attitude of certain customers in a more difficult economic environment. Sales in China, on the other hand, continued to surge, spurred by reagent sales. Reagent demand was particularly strong for clinical and industrial microbiology lines and for the VIDAS^® immunoassay range, which was up by more than 50%. In the entire region, sales of industrial applications rose by 12% over the first nine months.
• Sales in Latin America (8% of the consolidated total) increased by more than 7%, reflecting faster growth in Brazil (up 6%) and a continued positive trend in Mexico. Instrument sales led growth in clinical applications. In industrial applications, sales rose by more than 17%.

At constant exchange rates and scope of consolidation, nine-month 2013 sales may be analyzed by application as follows:

• In clinical applications, growth was driven by reagent sales in the three strategic ranges:
  • Microbiology was up 2.2%. Reagent sales, supported by the Group's extensive product portfolio, rose by nearly 4%: VITEK^® cards, BacT/ALERT^® blood culture bottles and FMLA^® reagents all contributed to this satisfactory performance. Instrument sales remained weak over the period. The Company continued to prepare for the launch of its new platforms. The prototype incubator incorporating imaging technologies is undergoing validation by a major European laboratory. In addition, the Company will install its new Virtuo™ blood culture instrument at certain pilot customer locations in late 2013, with no impact on net sales. The automated instrument will be gradually available for sale in 2014.
  • Sales of the VIDAS^® line increased by more than 4%, led by sales of both reagents and instruments. VIDAS^® 3, the new generation VIDAS^® platform, was CE-marked at the end of June and has enjoyed a promising launch, with more than 60 platforms installed in laboratories as of September 30, 2013.
  • Molecular biology, which accounts for 5% of consolidated sales, reported sales growth of more
    than 9% thanks, in particular, to strong commercial synergies with the ARGENE range acquired
    in July 2011. The ARGENE range delivered growth of more than 20% in the first nine months of
    the year.
• With double-digit growth in the third quarter, industrial applications remained on a buoyant trend. In the first nine months, sales were strong in North America and emerging markets (up 20%). The broad product portfolio, which now combines traditional bioMérieux ranges (such as TEMPO^® for the enumeration of bacterial flora and VITEK^® for bacterial identification) with AES solutions (including AES Blue Line™ for the automation of quality control labs), has proven to be a major strength in developing the industrial application business.
• Reagents and services, which accounted for 89.8% of total revenue, helped to drive growth in consolidated sales, with organic gains of 3.4% and 14% respectively.

OTHER FINANCIAL HIGHLIGHTS

• Consolidated balance sheet
  
  Net cash amounted to €9 million at September 30, 2013, reflecting strong cash generation during the summer. Net debt stood at €59 million at September 30, 2012.
• Human resources
  
  The Group had 7,704 full-time-equivalent employees at September 30, 2013. There were 7,413 employees at December 31, 2012, based on the same method of calculation.

THIRD-QUARTER OPERATING HIGHLIGHTS

• BioFire Diagnostics, Inc.: a major acquisition in molecular biology in the United States
  
  In early September, bioMérieux announced that it had entered into an agreement to acquire 100% of BioFire, a privately held U.S.-based company specialized in molecular biology. BioFire invented, manufactures and markets the FilmArray^® system, a simple and rapid multiplex PCR molecular biology solution. FilmArray^® makes it possible to take a syndromic approach to infectious disease diagnostics, a novel method of medical diagnosis based on analyzing a syndrome (i.e., a set of symptoms) in order to identify, in a single reagent, its associated viral or bacterial pathogens.
  
  As soon as the transaction closes, BioFire’s consolidation will enable bioMérieux to increase the proportion of sales derived from molecular biology to more than 8% and to strengthen its position as a major player in infectious disease diagnostics, its core strategic focus. In addition, with a complete range of technologies for clinical microbiology diagnostics, bioMérieux will reinforce its leadership in microbiology.
  
  The transaction will include a $450 million acquisition price and the company’s net financial debt. Completion of the transaction remains subject to the usual closing conditions, in particular certain regulatory approvals. The acquisition is expected to close by the end of the fiscal year or in early 2014.
• Bond issue
  
  In early October, bioMérieux made its first bond issue, placing €300 million worth of 7-year bonds with institutional investors. The bonds mature on October 14, 2020 and pay interest at an annual rate of 2.875%. The issue was more than four times over-subscribed.
  
  This bond issue will allow bioMérieux to extend the average maturity of its debt under favorable financial conditions, diversify its sources of financing beyond existing syndicated lines of credit and contribute to the funding of the BioFire acquisition.
• Commercial offer
  
  bioMérieux has launched 15 new products since the beginning of the year.
  
  In August 2013, bioMérieux received U.S. Food and Drug Administration 510(k) de novo clearance for VITEK^® MS, the first clinical mass spectrometry MALDI-TOF-based system commercially available in the United States for the rapid identification of disease-causing bacteria and yeast. The latest addition to the VITEK^® family of products, VITEK^® MS is the first system to enable detection of disease-causing microorganisms in minutes.
  
  VIDAS^® 25 OH Vitamin D Total has also been CE-marked and bioMérieux proceeded with its European launch. This test, which is designed to be used on the VIDAS^®, mini VIDAS^® and VIDAS^® 3 automated immunoassay platforms, makes it possible to measure total vitamin D levels in human serum and plasma. It provides extremely precise and rapid results, within 40 minutes. With VIDAS^® 25 OH Vitamin D Total, the clinical laboratories which currently send samples to reference laboratories will now be able to perform vitamin D testing in-house.
  
  The Company has also launched Parvovirus B19 R-gene^®, a new CE-marked ARGENE assay based on real-time PCR technology. The test allows for detection and quantification of the three Parvovirus B19 genotypes. Primo-infection can lead to a mild infantile rash also called erythema infectiosum, or "fifth disease”. Parvovirus B19 infection can also lead to serious syndromes in immunocompromised patients.
• The Durham plant (North Carolina, United States)
  
  The Company is continuing to work to improve its BacT/ALERT^® blood culture bottle production lines at the Durham site in order to restore satisfactory supply levels and strengthen the quality management system in compliance with its commitments to the U.S. Food and Drug Administration.
• Deployment of the Global ERP system
  
  The Global ERP system continued to be successfully deployed during the period. Following launch in Belgium and the Netherlands during the quarter, it is now up and running in 18 subsidiaries.

2013 OBJECTIVE

Based on the good performance in the third quarter, bioMérieux is maintaining its organic growth objective for 2013. Despite a high basis of comparison in the fourth quarter, the Company will benefit from the resilience of its business model and the technological and geographic diversification of its business base.

INVESTOR CALENDAR

2013 sales: January 22, 2014, before start of trading

The above forward-looking statements are based, entirely or partially, on assessments or judgments that may change or be modified, due to uncertainties and risks related to the Company's economic, financial, regulatory and competitive environment, notably those described in the 2012 Registration Document. Accordingly, the Company cannot give any assurance nor make any representation as to whether the objectives will be met. The Company does not undertake to update or otherwise revise any forecasts or objectives presented herein, except in compliance with the disclosure obligations applicable to companies whose shares are listed on a stock exchange.

ABOUT BIOMERIEUX

Pioneering Diagnostics

A world leader in the field of in vitro diagnostics for 50 years, bioMérieux is present in more than 150 countries through 41 subsidiaries and a large network of distributors. In 2012, revenues reached €1,570 million with 87% of sales outside of France.

bioMérieux provides diagnostic solutions (reagents, instruments, software) which determine the source of disease and contamination to improve patient health and ensure consumer safety. Its products are used for diagnosing infectious diseases and providing high medical value results for cancer screening and monitoring and cardiovascular emergencies. They are also used for detecting microorganisms in agri-food, pharmaceutical and cosmetic products.

bioMérieux is listed on the NYSE Euronext Paris market (Symbol: BIM - ISIN: FR0010096479).
Corporate website: www.biomerieux.com. Investor website: www.biomerieux-finance.com.

APPENDIX: QUARTERLY SALES DATA

⁽¹⁾ Including the Middle East and Africa
⁽²⁾ R&D-related revenue

⁽¹⁾ Including the Middle East and Africa
⁽²⁾ R&D-related revenue

^* At constant exchange rates and scope of consolidation