bioMérieux - First-Quarter 2015 Business Review

Regulatory News:

bioMérieux (Paris:BIM), a world leader in the field of in vitro diagnostics, today released its business review for the three months ended March 31, 2015.

SALES

Consolidated sales amounted to €448 million in the first quarter of 2015, up from €371 million in the year-earlier period. Organic growth (at constant exchange rates and scope of consolidation) came to 8.7%, marking a clear acceleration compared with first-quarter 2014. On a reported basis, sales ended the period up 20.8% year-on-year, lifted by the €37-million positive currency effect (of which €27 million due to the U.S. dollar) and the two additional weeks of sales from BioFire, which was acquired and consolidated as of January 16, 2014.

⁽¹⁾ BioFire: sales from January 1 to January 15, 2015 excluded from the organic growth calculation
CEERAM: first consolidation of sales from this technological start-up acquired in late December 2014

Sales rose by 8.7% on an organic basis in the first three months of 2015, favored by the more severe winter flu epidemic in the Northern hemisphere, the satisfactory blood culture bottle production conditions at the Durham, NC site in the United States and the upturn in instrument installations in North America after the sharp slowdown in the final quarter of 2014.

The performance also attested to the effective strategic positioning and competitiveness of the Company, which enjoys a well-balanced profile in terms of technological diversification, product portfolio maturity and geographic footprint in a market with high barriers to entry. In particular, the Americas region established itself as a solid growth engine during the quarter, as its strong momentum amply offset the temporarily weaker pace of growth in the emerging markets caused by the slow return to normal sales operations in China. In all, sales in the emerging markets rose by 7% over the period and accounted for 23% of consolidated sales.

At constant exchange rates and scope of consolidation (like-for-like), first-quarter 2015 sales may be analyzed by region as follows:

⁽¹⁾ Including the Middle East and Africa

• Sales in the Europe - Middle East - Africa region (46% of the consolidated total) rose by nearly 4% overall, but performance varied by country.
  • In Western Europe (40% of the consolidated total), sales gained 3.3% year-on-year, led by the fast growth in Northern Europe (especially in the United Kingdom, Germany, Switzerland and the Nordic countries). On the other hand, sales in France edged back very slightly, dampened in particular by a difficult market environment in the clinical field. Sales rose by 2% in Southern Europe, even though the Greek business environment was impacted by the highly uncertain economic context.
    In the clinical market, growth was driven by reagents in all of the automated microbiology lines, by sales of VIDAS^® immunoassay instruments and by molecular biology products. Sales of industrial applications increased 3% year-on-year, held back by flat sales in France, bioMérieux Industrie's largest market in Western Europe.
  • Sales in the Eastern Europe, Middle East and Africa area rose by more than 8% in the first quarter. As announced, however, geopolitical tensions continued to weigh on demand in certain countries, particularly in Russia.
• In the Americas (40% of the consolidated total), 2015 got off to a strong start, with sales climbing nearly 20% in the first three months.
  • Commercial operations in North America (33% of the consolidated total) delivered growth of 21%. In particular, bioMérieux Inc. sales gained nearly 10% year-on-year on positive prior-year comparatives in the blood culture market. In addition, the business environment in the geographic area is favorable, with in particular greater focus on laboratory automation and efficiency and increased vigilance in the fight against bacterial resistance. The Company enjoys differentiated competitive positions, notably with its VIDAS^® B.R.A.H.M.S PCT^TM test for the diagnosis of sepsis in emergency situations.
    In addition, BioFire sales continued their fast upward trend, buoyed by both the extension of the installed base and a seasonal flu epidemic that was more severe than in 2014. In this environment, molecular biology laboratories appreciated the ease of use, speed and quality of the results delivered by the FilmArray^® respiratory panel, amplifying the sales impact of seasonal variations. At the same time, while volumes are still low, sales benefited from positive customer acceptance for the gastrointestinal panel, the most comprehensive panel cleared by the Food and Drug Administration (FDA), which contains several pathogens receiving FDA clearance for the first time.
    In industrial applications, sales of reagents and instruments in North America rose significantly, bringing total growth to around 9% for the quarter.
  • In Latin America (7% of the consolidated total), sales grew at nearly 15% year-on-year. The brisk momentum in Mexico, Colombia and Argentina more than offset flat sales in Brazil, where the challenging economic environment continued to worsen over the quarter.
    The clinical application business was spurred by microbiology equipment sales. Representing around 13%, sales growth in industrial applications remained firm in the region, which is a priority action zone for the Company.
• In the Asia-Pacific region (14% of the consolidated total), sales rose very slightly year-on-year, with performances varying by country. While growth was solid in Japan and India, sales in China were stable compared with first-quarter 2014, as robust reagent sales offset low instrument billings.
  Across the region, sales of clinical and industrial applications alike benefited from solid growth in demand for the VIDAS^® line.

Like-for-like first-quarter 2015 sales may be analyzed by application as follows:

⁽¹⁾ Of which 8.7% in VIDAS^® sales growth
⁽²⁾ Including €37 million in BioFire Diagnostics sales

• Clinical application sales rose by 9.2% in the first quarter.
  • Microbiology, the Group's core business, saw sales gain 4.8%, primarily led by strong growth in the Americas region. In particular, the automated ID/AST line reported a good performance during the quarter, supported by both the traditional VITEK^® 2 platform and the more recent
    VITEK^® MS mass spectrometry solution, which enables the fast identification of a broad menu of microorganisms and can connect to the VITEK^® 2 for antibiotic susceptibility testing. Moreover, blood culture sales, which had declined in first-quarter 2014, benefited this year from the improvement in production conditions at the Durham site. In this environment, and with the ambition to meet customer expectations more effectively, bioMérieux will continue to launch its new clinical microbiology solutions, including VIRTUO^TM, its new automated blood culture instrument, the FAN^® Plus blood culture bottles using the patented adsorbent polymeric beads (APB) technology and the "Lab Efficiency^**" solution combining its own platforms and Copan systems, for which laboratories have expressed promising initial interest.
  • In immunoassays, the VIDAS^® line reported an almost 9% increase. Sales of high medical value tests and in emerging markets now represent around 75% of total VIDAS^® reagent sales. These sales grew rapidly over the quarter, offsetting the decline in routine test sales in developed markets, where laboratories are continuing to consolidate. Backed by the successful repositioning of its VIDAS^® system, bioMérieux is pursuing its vision of being a specialized player in immunoassays.
  • Molecular biology sales soared an organic 49% year-on-year. During the quarter, the FilmArray^® system enjoyed sustained commercial success in North America, where the installed base rose to 1,600 systems. In addition, the ARGENE^® line had another period of rapid growth.
• Industrial applications, which accounted for 18% of consolidated sales, rose by 5.6% year-on-year. While sales continued to decline in China and remained flat in France, they rose sharply in the Americas and certain European countries, particularly the United Kingdom and Germany. Demand was firm in the pharmaceutical, cosmetics and personal care industries, while TEMPO^® for the enumeration of bacterial and fungal flora and VIDAS^® for the detection of pathogens maintained their solid expansion in the agrifoods industry.
• Sales of reagents and services, which represented 91.1% of the consolidated total, rose by nearly 9% on an organic basis.

OTHER INFORMATION

• Net debt

At March 31, 2015, after payment of taxes and variable compensation, net debt stood at €283 million. It represented €249 million at year-end 2014.

The Company has issued €300 million in seven-year bonds, which were placed with institutional investors in October 2013. It also has a €350-million syndicated line of credit expiring on May 20, 2019. Lastly, on March 31, 2015, it signed a 12-year, €45-million lease financing agreement to fund the extension of the Marcy l’Etoile site.

FIRST-QUARTER OPERATING HIGHLIGHTS

• Production and quality system

In the first quarter, the Company pursued the reorganization and realignment of its "Global Quality” function. In parallel, it continued the deployment of its action plans aiming at answering the remarks and warnings from the FDA relating to the Durham and St. Louis sites (United States). In addition, in February 2015, in an injunction letter, France's ANSM drug regulatory agency requested that bioMérieux complete, within 12 months, works required to bring into compliance certain production units of its Craponne site (France). In April 2015, based on discussions with the ANSM, the Company has defined the action plan to be deployed in order to meet ANSM requests.

• Commercial offer

During the quarter, the new generation FilmArray^® system, FilmArray^® 2.0, was cleared by the FDA and CE-marked. The main feature of this compact instrument is its higher throughput, which allows laboratories to process up to 175 samples in a day. The solution accommodates up to eight FilmArray^® 2.0 units operated by a single computer and is capable of connecting to Laboratory Information Systems (LIS).

In addition, the Company introduced a new version of the NucliSENtral^® middleware, which helps to optimize workflows in molecular biology laboratories using notably bioMérieux's ARGENE^® tests and easyMAG^® and easySTREAM^TM automated sample preparation systems.

Lastly, the quarter saw the launch of the bioNexia^® Legionella rapid diagnostic test that detects the presence of Legionella pneumophila serogroup 1, the most commonly identified pathogen in Legionnaires’ disease, directly from urine samples in just 15 minutes. This first-line test rounds out bioMérieux's comprehensive solution, which also includes culture media, mass spectrometry and molecular biology tests, in compliance with recommendations issued by France's HCSP public health agency.

In industrial applications, the TEMPO^® enumeration method was added to the U.S. Department of Agriculture's Microbiology Laboratory Guidebook (MLG), which presents best practices for analytical testing and procedures to ensure the optimal safety of the U.S. food supply.

POST-BALANCE SHEET EVENT

• De novo application submitted for the FilmArray^® Meningitis/Encephalitis Panel

In April, BioFire submitted a de novo classification request to the U.S. FDA for the FilmArray^® Meningitis/Encephalitis (ME) Panel. The pioneering FilmArray^® ME Panel addresses a critical, unmet need for quickly identifying central nervous system infections by utilizing a comprehensive panel to test cerebrospinal fluid (CSF) for the most common bacteria, viruses and fungi responsible for community acquired meningitis or encephalitis. A one-hour turnaround time has the potential to reduce mortality and morbidity from these devastating diseases and to positively impact patient management. FilmArray^® ME will only be available for sale once the FDA has completed its process. The Panel will be the fourth clinical diagnostic test to run on the FilmArray^® system, making its syndromic menu the largest commercially available for a multiplexing platform.

INVESTOR CALENDAR

Annual Meeting of Shareholders: May 28, 2015
First-half 2015 sales: July 17, 2015 - 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 2013 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 42 subsidiaries and a large network of distributors. In 2014, revenues reached €1,698 million with 88% 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 agrifood, pharmaceutical and cosmetic products.
bioMérieux is listed on the NYSE Euronext Paris stock market (Symbol: BIM – ISIN: FR0010096479).
Corporate website: www.biomerieux.com. Investor website: www.biomerieux-finance.com.

^* At constant exchange rates and scope of consolidation
^** Operational efficiency of clinical microbiology labs