- From the onset of the COVID-19 crisis, Eurofins leadership’s priority has been to mobilise all available scientific talent and resources to help its clients and the world fight this terrible disease. Few companies in the world have so many and diverse scientific and technological capabilities to develop new solutions and services to combat the COVID-19 pandemic. Over 20 international multidisciplinary scientist groups are working tirelessly across time zones to create new modalities to support healthcare workers and authorities and Eurofins clients in the biopharmaceutical and other industries in their efforts against the disease. The Group can report that strong progress has already been made and expects further breakthroughs in the near future. Meanwhile, in spite of the impact of the lockdowns on some of the Group’s companies and their clients, overall Eurofins core business demonstrated strong resilience in Q1 2020.
- Q1 2020 revenues increased 7% year-on-year to EUR 1,142m from EUR 1,067m in Q1 2019.
- Solid organic growth1 of 4.1% was achieved in Q1 2020 (4.6% corrected for Boston Heart Diagnostics and two other laboratories temporarily closed due to a fire), reflecting the strong resilience of Eurofins and its end markets.
- The impact from the COVID-19 pandemic related lockdowns on Eurofins operations varied across geographies and over time. Social isolation measures mainly affected Eurofins’ laboratories in China in February and March, and some of its laboratories operating in Italy, Austria, Spain, France, Germany and the U.S.A. in March. In spite of these headwinds due to temporary lockdowns and thanks to very good performance otherwise, overall organic growth remained strong in Q1 2020.
- The vast majority of Eurofins’ laboratory testing services are deemed essential for many critical supply chains as well as for the health and safety of the population and, therefore, have been allowed to continue operating during most lockdowns imposed by authorities.
- After a slow start, as this testing was initially reserved to government public health laboratories, from mid-March 2020 SARS-CoV-2 related testing volumes started to grow day after day as some national health authorities began involving private testing laboratories. Overall though, revenues generated in March from this testing remained modest as the Group was still building up its reagents and equipment supply chains and most countries still favoured testing at public hospitals and limited testing to severely ill patients only. As it has since then appeared that government laboratories may not always be able to provide the testing volumes required in order to contribute to support public health authorities in their work, Eurofins is now significantly increasing its testing capacity and the COVID-19 testing reagents production volume of its in vitro diagnostic (IVD) products companies.
- Eurofins is ramping up production to enable over 20 million patients tests per month by end of May 2020 spread over several important modalities.
- Eurofins teams are fully committed and mobilised to contribute to the global response to the COVID-19 crisis. By leveraging all of its technical capabilities across its global laboratory network, Eurofins has developed one of the most comprehensive testing and service offering to support healthcare practitioners and authorities around the world as well as the biopharmaceutical industry respond to the COVID-19 crisis. Below are some highlights of the Group’s testing capacities and solutions already available to customers (more information can be found on pages 6 and 7 of this release):
- Since March 2020, Eurofins has been offering testing for the evaluation of COVID-19 using real time reverse transcriptase polymerase chain reaction (RT-PCR) method. Several of its laboratories received approval for their laboratory-developed tests (LDTs) by the Food and Drug Administration (FDA) in the U.S.A. and other national authorities. Combining its own LDTs with reagents provided by its suppliers, the Group’s goal is to reach a global capacity to carry out in excess of 2 million tests per month by mid-May 2020.
- Early April, Eurofins started to offer ELISA and CLIA-based serology testing services to detect Antibodies expressed after COVID-19 infection. Global capacity across its laboratory network for these Antibodies testing services is also expected to exceed 2 million tests per month by mid-May 2020.
- On 17 April 2020, Eurofins also launched serology testing kits to be used by state or private laboratories on most open systems and is expecting to reach a production capacity of over 10 million tests per month by the end of May 2020.
- Eurofins has launched a number of additional tests that help protect from the virus such as tests to detect the presence of SARS-CoV-2 on environmental surfaces, for example in work or retail environment or to control the quality of Personal Protective Equipment (PPE) and medical equipment.
- Eurofins Genomics’ six sites around the world are increasing their capacity to provide primers and probes to be incorporated in millions of SARS-CoV-2 testing kits produced by IVD companies. On 16 April 2020, they also launched novel and highly efficient genome sequencing services to support research and epidemiology studies to combat COVID-19.
- The Group has also launched a large number of products and services aimed at supporting research for the development of novel vaccines and therapeutics. The Group’s unmatched global network of 35 Biopharma Product Testing laboratories have ramped up capacity to support some of the largest global pharmaceutical and biotechnology companies developing products to fight COVID-19.
- Since the onset of this pandemic Eurofins is taking a number of measures to protect our employees and ensure we will be able to continue supporting our customers to the high standard they expect from us. We have worked with our teams to implement practices to minimize the risk of infection to both themselves and others. We put in place preventive measures which have been recommended by both the World Health Organization and relevant government and national public health authorities in relation to social distancing and effective hygiene measures to uphold operations essential for customers and society in this difficult situation while ensuring the welfare and health of our staff.
- In view of the unprecedented uncertainty on the global mid-term economic outlook following the COVID-19 pandemic and in spite of the significant additional work it expects to carry out for the next 18 to 36 months to support the biopharmaceutical industry and public health authorities in their fight against COVID-19, like most companies, Eurofins has also taken measures to protect cash and accelerate reduction of its financial leverage. Very early at the onset of the pandemic, Eurofins implemented conservative measures in terms of capex and M&A spend, as well as with regards to hiring and management of personnel costs in order to minimise its cash outflows until better visibility is obtained on the global economic outlook.
- As a sign of solidarity with their teams, Eurofins’ Board members and the Group’s CEO have decided to contribute 25% of their compensation to a solidarity fund during Q2 2020, a period during which some employees of those of the Group’s companies most affected by lockdowns have to be furloughed for a number of weeks. Members of the Group Operating Council will also contribute to the solidarity fund through a reduction in compensation in Q2. Broadly in the Group, where it was possible, compensation has been frozen at 2019 levels and decisions on variable compensation for 2019 have been deferred until more visibility on the economic outlook is available. In countries, activities or companies most impacted by the economic effects of lockdowns, several leaders have taken additional personal compensation deferment or reduction steps in solidarity with their affected members of staff. The Group is also implementing reductions of its central overhead costs. In addition, the Eurofins Foundation and Eurofins founders will contribute to the solidarity fund to provide additional support, both financial and non-financial, to some employees and their dependents who may experience exceptional hardship due to the impact of the coronavirus pandemic. In some countries, funds will also be set aside to offer free COVID-19 testing to some Eurofins employees where this is not covered by their medical insurance or other state supported programmes.
- Like many other firms, some of the Group’s companies that were affected by forced lockdowns have also applied for national support measures to mitigate the negative financial impact of the lockdowns and provide relief to furloughed employees.
- Additionally, in light of the current regulatory context, limited visibility on the global economic outlook and benefits of faster deleveraging, alongside all other precautionary measures, Eurofins management has decided to propose to the June 2020 Annual General Meeting to not distribute a dividend for 2019.
- Eurofins is well-funded with significant cash on its balance sheet and undrawn long-term credit facilities, which together represented over EUR 1 billion at the end of March 2020, in addition to credit facilities used to back up its commercial paper programme.
- Due to the unprecedented circumstances linked to the COVID-19 pandemic, the Board of Directors of Eurofins has decided to postpone the Annual General Meeting initially scheduled for 23 April 2020 to 26 June 2020 and hold it by correspondence.
- Outlook: at this point in time, it is difficult to predict the impact of the COVID-19 pandemic on the remainder of the year, as economic and lockdown situations evolve rapidly in most geographies. Nevertheless, Eurofins is mostly positioned in highly resilient markets with a large and globally diversified network of laboratories active in essential sectors such as Food, Water, BioPharma, Clinical and Genomics testing. Eurofins management expects some of its laboratories to be directly and indirectly affected by lockdowns, especially in April and May 2020. However, other activities are growing very fast due to SARS-CoV-2 related biopharma R&D and COVID-19 testing for medical or workforce protection objectives. The lockdown impact, mostly on those of Eurofins laboratories providing less essential testing services or their clients, is expected to be for the most part temporary and primarily affecting the earlier part of Q2 2020. On the other hand, the additional activity related to COVID-19 testing and biopharma research may unfortunately have to continue for much longer as the virus may stay present in many communities for some amount of time or could start spreading again after the strictest social isolation measures are lifted. As a result, over the full year, while it is impossible yet to make any precise forecasts, the two effects may well compensate each other. Eurofins has thus decided not to withdraw or update the objectives it set for 2020 for its organic development. In view of the unprecedented level of uncertainty, other than for investments to support Eurofins multi-pronged efforts to support the fight against COVID-19, the Group intends nonetheless to be very frugal with its capex, M&A and operating expenses. This should result in faster deleveraging of Eurofins’ balance sheet. Better visibility will hopefully be possible when reporting H1 2020 results.
Comments from the CEO, Dr. Gilles Martin:
“Our mission at Eurofins is Testing for Life. Never is this more true than today, as we put our full energy and commitment towards supporting the fight against this global pandemic. We are a community of people including scientists and entrepreneurs, who are banded together to provide excellence in scientific innovation and service. As the world faces the challenges of COVID-19, at Eurofins we are ever mindful of our vision and the race to bring all of our resources to bear on the saving of lives during this crisis. We are pleased to have the opportunity to contribute on many fronts to the world’s fight against COVID-19. Our innovations in testing give healthcare providers additional options in evaluating their patients during this terrible outbreak. Our scientists are working with passion to support their clients in the Biopharma industry developing therapies and vaccines against COVID-19 in record time. Our teams are supporting epidemiologists with new solutions to trace the disease. Others are setting up processes for validating new sources of personal protection equipment or medical devices or working to secure the continued supply of critical infrastructure and essential services such as continued safe drinking water, essential pharmaceutical products, medical devices and important chemical products and the safe food, beverages and agricultural products sold on supermarket shelves, among many others.
