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Shares I love: bioMérieux

bioMérieux invested early in PCR testing and this is now one of its fastest-growing segments
September 23, 2021
  • One of bioMérieux's fastest-growing business segments is PCR tests
  • The company is well-placed to benefit from structural growth drivers such as the move towards personalised medicine and need to reduce healthcare costs

Lorna Logan, co-manager of Stewart Investors European Sustainability Fund (IE00BN2B0908), explains why she invests in French healthcare equipment company bioMérieux (FRA:BIM).

“bioMérieux makes testing equipment used to diagnose infectious diseases, screen for cancer and detect microorganisms in food, pharmaceutical and cosmetic products. The company has been a pioneer in the field of diagnostics for over 55 years with a steadfast mission to improve patient outcomes, increase laboratory efficiency and protect the health of people around the world.

“We favour companies led by long-term focused 'stewards' who show integrity and competence. bioMérieux is majority-owned by the Mérieux family who have dedicated themselves to improving public health for generations.

“The company is currently led by Alexandre Mérieux who, like his predecessors, thinks in decades rather than quarter years. A good example of this is bioMérieux’s acquisition in 2014 of BioFire Diagnostics, which was lossmaking at the time. bioMérieux invested heavily in BioFire’s early technology for automated polymerase chain reaction (PCR) tests and today this is one of its fastest-growing business segments. The technology was also instrumental in supporting the successful rollout of Covid-19 testing solutions early last year.

“We also look for world-class franchises and bioMérieux is a market leader in important niches including microbiology and antimicrobial resistance – a huge global challenge. The overuse of antibiotics in humans, animals and agriculture has led to a widespread rise in antibiotic resistance and every 45 seconds someone dies from an infection caused by antibiotic-resistant bacteria. The company took the bold decision to commit 75 per cent of its significant research budget to tackling this growing threat and is now the leading developer of testing technologies to deal with antimicrobial resistance.

“bioMérieux is also well-placed to benefit from structural growth drivers such as the move towards personalised medicine, the need to reduce healthcare costs and the ongoing battle to identify emerging infectious diseases. All but 10 per cent of its revenues come from recurring sales of products, such as reagents, and services, which provide resilient cash flow generation. bioMérieux’s net cash balance sheet gives it acquisition firepower and it has the potential to expand margins as it continues to scale the business.

“We admire the healthy balance bioMérieux strikes between achieving profitable growth and fulfilling its mission to improve public health worldwide. The company is providing Covid-19 test kits to 55 African countries at reduced prices, donating equipment, setting up mobile laboratories and training local practitioners through the Mérieux Foundation. In 2020, bioMérieux also donated around 10 per cent of its profits to support vulnerable individuals during the pandemic and beyond.

“The long-term potential of bioMérieux is underappreciated by many market participants whose investment timeframes are a fraction of that of the company’s stewards.”