Core view
I. It has only been established for 35 years and has built the youngest international testing giant with high professional level
Eurofins was founded in 1987 and listed in 1997. In 2021, the company's revenue exceeded 6.7 billion euros, with a compound annual growth rate of 33% since its listing. At present, the company has more than 900 laboratories in 54 countries, 58000 employees and more than 200000 analytical methods, and carries out more than 450 million tests every year. The company is a global leader in food testing, environmental testing and biopharmaceutical services, and has grown into the youngest international testing industry giant in only 35 years. The company is a typical family business and inherits SNIF-NMR developed by its parents ™ Patent analysis method started with the founder Martin family holding 33% and 66% of the voting rights. At present, the company has four major sectors: Food and feed testing, environmental testing, biopharmaceutical services and clinical diagnosis. The compound growth rate of net profit from 2011 to 2021 reached 30%; Europe and North America are the core regions of the company, accounting for more than 80% of the total revenue. Since the listing of the company, the number of employees has expanded rapidly, with a compound growth rate of 33% in 25 years; At the same time, except for individual years, the company's per capita income has maintained growth, and the per capita profit has basically remained above 4500 euros.
II. Food environment and biopharmaceutical services continue to make efforts to accelerate the layout of clinical diagnosis
Growth of high-quality food and feed industry: maintain a wide range of customers; In 5 years, establish the spoke laboratory layout in the United States to reduce costs and increase efficiency; Relying on the original leading position, continue to expand new subdivided fields and regions, and constantly upgrade in a circular manner.
Environmental testing: after entering the environmental testing market in 2000, the stricter environmental regulatory measures in North America and large-scale and frequent acquisitions led the company to take the lead in environmental testing business. At present, it has become the world's leading environmental testing service provider.
Biopharmaceutical services: from 2011 to 2015, the first wave of acquisition was launched, focusing on pharmacological and toxicological analysis; From 2017 to 2018, we continued to expand our business lines and open up the whole CXO chain. In the context of the continuous growth of the North American cro market, the company increased its acquisition efforts in North America, and the revenue of North American biopharmaceutical services reached 1 / 3 of the total regional revenue in 2018.
Clinical diagnosis: the company has been deeply engaged in genomics for many years. In 2014, it accelerated the layout of the professional clinical diagnosis market by acquiring regional leaders. Since then, it has continuously adjusted and enriched its business categories. In 2017, the company first introduced non-invasive prenatal testing, with strong demand, which significantly improved the company's market position in the field of clinical diagnosis.
Covid-19 detection: in 2020, the company quickly responded to the demand for covid-19 detection, quickly launched three detection products of nucleic acid, antibody and antigen, and provided supporting environment, product covid-19 detection and respiratory virus test, so as to make a significant contribution to the fight against covid-19 epidemic. Relying on its profound accumulation in the field of genomics and medicine, the company seized the historical development opportunity. In 2020, covid-19 detection and reagent brought more than 800 million euros to the company.
Others: it has established a global leading position in five potential niche markets, including genomic services, agricultural science cro services, discovery pharmacology, cosmetics testing and advanced material testing, laying a foundation for future growth.
III. pay equal attention to endogenesis and extension, with strong family empowerment and execution
Endogenesis: the laboratory area of the company maintained rapid growth. From 2000 to 2021, 201 laboratories were established, with an average annual growth rate of more than 50000 square meters. On the basis of expanding the laboratory area, the company modernized the existing laboratory and invested in the development of the most advanced customized IT solutions. By the end of 2021, the company has 950000 square meters of modern laboratories. The acceleration of laboratory construction provides the company with great growth potential.
Extension: since listing, the company has completed 437 acquisitions. In 2012, the company's net operating cash flow reached 100 million euros. Since then, the expansion has accelerated, reaching the peak of M & A in 20172018 (60 companies were acquired in 2017 and 50 companies were acquired in 2018). At the end of each five-year plan, the company's M & a strength will be significantly improved, and then it will return to the normal level in the next year (the proportion of M & A investment in revenue in most years will not exceed 10%). The company's rapid expansion stage is dominated by the acquisition of market leaders, and will start large-scale mergers and acquisitions while entering new fields.
Management: Gilles Martin, founder of the company whose parents are professors at Nantes University, developed a method to measure the sugar content of wine; Gilles Martin commercialized this method and extended the application of analysis to the whole food industry in the next decade. Eurofins is a typical family business. At present, three members of the core executive team are members of the Martin family. The company has determined the strategic development idea of "high barrier + scale advantage + synergy to consolidate the leading position", and has formulated three "five-year development plans" since 2008. With the help of the efficient execution of the family business, the company realized the last two "five-year plans" in three years, and achieved 497% revenue growth in only ten years.
IV. 35 years of Eurofins, creating a legendary business password
Development strategy: continue to develop new technologies & high professional level & huge international network, and build a leading position in the industry; The business is relatively focused and the sectors are relatively concentrated; Pay equal attention to both endogenous and extension, and the endogenous growth rate is basically maintained at more than 7.5%. After the peak of M & A, it enters the internal potential tapping period, and constantly optimizes the layout of the laboratory through "integration merger integration".
Management Optimization: on the basis of ensuring the scale of the laboratory, the efficiency of laboratory management is continuously improved through modernization & it empowerment.
Strong execution: the second five-year plan and the third five-year plan were completed in three consecutive years, and the revenue increased by 262% year-on-year from 2012 to 2018; For many times, it took less than 10 years to become the leader of market segments in different regions; It will only take 35 years to become the international testing giant with the highest revenue in 2021.
V. risk tips:
1) the growth rate of downstream demand is lower than expected; 2) The order growth rate of listed companies was lower than expected; 3) Risk of gross profit margin decline due to fierce market competition; 4) The progress of M & A is less than expected; 5) Chinese and international enterprises are not completely comparable, and the development history of foreign enterprises is only for reference; 6) The performance of listed companies is less than expected; 7) The development progress of new sectors of listed companies is less than expected; 8) Impairment risk of accounts receivable.
