SAFC achieves, maintains growth objectives

15 January 2008 23:08  [Source: ICIS news]

By Clay Boswell

NEW YORK (ICIS news) --The diversified business model employed by Sigma-Aldrich Fine Chemicals (SAFC) has enabled it to achieve a key objective of 10% annual sales growth, a senior company official said at a press briefing on Tuesday.

SAFC President Frank Wicks said the company would continue to expand its technology portfolio, and he projected that growth would continue to exceed 10%.

Wicks explained the segmentation of St. Louis, Missouri-based SAFC, a unit of Sigma-Aldrich. One of the first things he did after taking the helm in 2003 was try to better understand what customers the business was serving, he said.

“That was the basis for establishing the way we set ourselves up,” he said.

First, SAFC established a Pharma segment. After JRH Biosciences was acquired, a Biosciences segment was created to focus on critical raw materials for cell-culture manufacturing.

“Soon after that was when we launched the Supply Solutions branding to try and take that ‘old’ business of selling the larger quantities of catalogue items into something different, which is now that we don’t sell just products, we sell solutions and all of the services and support needed for those raw materials,” Wicks said.

Finally, SAFC established the Hitech segment, which offers collaborative chemistry services to enable future technology, such as in semiconductors. The acquisition of Epichem last year has dramatically expanded the potential of Hitech.

Supply Solutions currently contributes 41% of revenues; Biosciences, 27%; Pharma, 20%; and Hitech, 12%.

“If I had to take a long-term view of where I’d like this to be, I’d like to see the percentages even out more - 25% in each of these businesses,” said Wicks. “Part of it, the strategy is diversification. So that as various things happen, be it in pharma, biopharma, the high-tech electronics industry or whatever, hopefully when one cylinder isn’t working, the other three are.

“And that has worked fairly effectively for us,” Wicks continued. “Every one of these has had aspects of success when others maybe stumbled for a quarter.”

Supply Solutions, which had been expected to double its growth of 3%, to 6%, when it was created in 2005, has actually seen growth of over 10% each year since, owing in part to the clearer communication of the offering, he said.

Wicks said the company aimed to continue delivering 10% growth in the year ahead. Additional acquisitions in any segment would be directed toward niche technologies or possibly capacity expansion.

He singled out Biosciences, in particular, as an area where “we are going to strengthen our existing skills as responsive experts and, for all of our segments, really, it’s understanding what the customer’s needs are, and building ourselves and our solutions around them”.

Hitech will also be the subject of expansion.

Wicks said he expected the segments to be more balanced by 2011. He also projected a tripling of 2003’s $250m (€168m) revenues. SAFC currently accounts for 28% of Sigma-Aldrich’s over $2bn sales, or almost $600m.

($1.00 = €0.67)


By: Clay Boswell
+1 713 525 2653



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