16 Bachem Annual Report 2019

Bachem’s world becoming even more multi-facetedBachem is expanding its portfolio: In addition to the existing peptide offering, it is now also expanding its capacities in the area of oligonucleotides. Both these molecule classes have been a focus of the world’s leading research institutions for many years. Whereas peptides have been an established component in the medications market for decades, oligonucleotides have only recently made the breakthrough as successful therapeutic agents. However, the clinical pipeline for both substance classes would suggest that further exciting new developments and products can be expect-ed in both areas.

Bachem’s customers in the field of basic research are mainly universities, institutes, and the research depart-ments of pharma companies. The primary objective in this segment is speed and availability – the new ideas of today should be implemented in the laboratories of tomorrow. With its catalog of products and its online shop in particular, Bachem is ideally positioned to achieve this goal. A substantial proportion of the more than 5 500 products are in stock and can be delivered within one to two days. Every year, Bachem supplements its catalog with new, innovative products emerging from the latest key areas of research.

If, despite this broad portfolio, a product is not included in the catalog, Bachem can rapidly offer this as a custom synthesis option. Every year, Bachem’s site in the UK produces several hundred peptides by custom synthe-sis. Short delivery times and competitive prices are important factors here too. There are many competitors in the field of non-GMP (GMP = Good Manufacturing Practice) custom synthesis, including increasingly from Asia. Even some universities offer custom synthe-sis services. In this competitive market environment, Bachem focuses on technically sophisticated high-quali-ty products such as diagnostic and cosmetic peptides.

Active ingredients in drugs constitute the largest area of application at Bachem. As well as producing approved active pharmaceutical ingredients (APIs), Bachem also supports numerous new chemical entity (NCE) custom-ers in their clinical development with products and services. The main customers here are small and large pharma and biotech companies in the US, Europe

MARKETS & CUSTOMERS

As market leader, Bachem offers pep-tides – and now also oligonucleotides – globally for a whole spectrum of different applications. Its core focus areas are thera-peutic applications and clinical development. In addition to their use in basic research, pep-tides and oligonucle-otides are also widely used in diagnostic and cosmetic appli-cations.

17 Bachem Annual Report 2019

TOGETHERWE LEAD

MARKETS & CUSTOMERS

and Asia, for whom intensive technical and regulatory exchanges of expertise are of particular importance. Bachem typically works closely with customers over many years with a view to bringing a new drug to market. This requires extensive experience in the development of new drug substances. Globally, only a small number of providers meet these requirements, and the barriers for new market entrants are high.

Bachem has traditionally also manufactured generics, i.e. drug substances whose patent protection has expired. Customers in this sector are typically generics compa-nies. Increasingly appearing on the scene are companies that work on new applications for such generics – inno-vative formulations or additional therapeutic areas, for example. In 2019, Bachem successfully supported three clients in obtaining regulatory approval for established products in new formulations. Here too, the products are extremely sophisticated and often developed in close partnership with customers. Customers above all value Bachem’s regulatory expertise, reliability, and long-standing experience in this area.

Bachem Group’s operating results in 2019The Bachem Group generated sales of 313.7 million CHF in 2019, an 11.0% increase in Swiss francs. Once again, growth was first and foremost generated in the American market. Whereas sales in North America rose by 30.3% to 155.1 million CHF, sales in Europe/Asia remained stable at 158.6 million CHF. Once again, NCE and generics projects – which are so important in the US – developed very well. A number of projects were successfully supported in the process of obtaining approval, while other projects are on the verge of submis-sion. Following the various project postponements and delivery delays on the customer side in Europe and Asia in 2018, a number of new projects successfully got under way in 2019. However, most of these projects are still at an early stage and will therefore only make significant sales contributions over the coming years. In the NCE environment there was evidence of unbroken global momentum.

PIONEERING PARTNER FOR PEPTIDES

BACHEM HAS BEEN A PIONEER IN THE FIELD OF PEPTIDES SINCE NEARLY 50 YEARS. IT HAS BUILT LONG-TERM CUSTOMER RELATION-SHIPS THAT ARE IMBUED WITH A STRONG SENSE OF TRUST. BACHEM IS RECEPTIVE TO INDIVIDUAL NEEDS AND IS A COMPE-TENT, RELIABLE PART-NER.

18 Bachem Annual Report 2019

MARKETS & CUSTOMERS

Bachem sells its products worldwide for use in re-search & development, cos-metics, diagnostics, medi-cines, and other application areas. As in previous years, drug substances for pharma-ceutical and biotechnology companies accounted for the bulk of Bachem Group sales in 2019. From a geographical perspective, the USA, Europe and Japan remained the most important markets.

Bachem addresses the global market through two regional segments of North America and Europe/Asia, based on sales recorded by the Group’s subsidiar-ies. Sales to customers in North and South America are reported under the North America segment. Sales to customers in Europe, Asia and the rest of the world are all accumulated under the Europe/Asia segment. Asia account-ed for just under 10% of group sales in 2019. The key market in Asia remains Japan, where the Tokyo branch has successfully positioned itself.

HEADQUARTERSAFFILIATES

SOUTHAMERICA

NORTHAMERICA

USA

Bachem

Vista,USA

Americas, Inc.

Bachem

Torrance,USA

Americas, Inc.

19 Bachem Annual Report 2019

MARKETS & CUSTOMERS

BACHEM OPERATES SEVEN CENTERS OF EXCELLENCE IN SWITZERLAND, THE UK, GERMANY, THE US AND ASIA THAT ARE FOCUSED ON THE PRODUCTION OF ACTIVE PHARMACEUTICAL INGRE-DIENTS, CUSTOM SYNTHESIS PRODUCTS AND CATALOG PEPTIDES.

BACHEM HOLDING AGBubendorf, Switzerland

BACHEM AMERICAS, INC. Torrance, USA

BACHEM JAPAN K.K. Tokyo, Japan

BACHEM SASuccursale VionnazVionnaz, Switzerland

BACHEM (UK) LTD.St. Helens, Great Britain

BACHEM DISTRIBUTION SERVICES GMBH Weil am Rhein, Germany

BACHEM AGBubendorf, Switzerland

BACHEM AMERICAS, INC. Vista, USA

AFRICA

AUSTRALIA

ASIAEUROPESWITZERLAND

UK GERMANY

Bachem (UK) Ltd.

St. Helens, Great Britain

Bachem Holding AGBubendorf,Switzerland

Bachem Distribution

Services GmbH Weil am Rhein,

Germany

Bachem AGBubendorf,Switzerland

Bachem SASuccursale

VionnazVionnaz,

Switzerland

Bachem Japan K.K.

Tokyo,Japan

20 Bachem Annual Report 2019

MARKETS & CUSTOMERS

The research chemicals business expanded by 24% compared to the prior year. In the area of catalog sales, growth was driven by sales in the bulk business in particular. In the area of custom synthesis, the business with cosmetic and diagnostic products developed very well. However, the main growth here resulted from custom syntheses in connection with NCE development projects, as the market required significant quantities for toxicology studies.

Once again, Bachem generated growth primarily through drug substances in 2019. Whereas the NCE business developed steadily, sales of generics recorded a strong rise. On the one hand, increases were generated with existing products thanks to a very favorable market environment. On the other, Bachem was able to support clients in their market launches of established molecules with innovative new dosage forms.

As in the previous year, sales in Asia remained at a stable level. In a positive market environment, regional shifts and postponements of projects meant that this market dynamics could not be fully translated into sales figures. Above all, Bachem was able to identify and realize new projects in Japan, South Korea, China, and Taiwan.

The outlook remains promising for fiscal 2020: In addition to a well-filled order book, new NCE and generics projects are appearing on the horizon. Bachem therefore expects to be able to support customers in the submis-sion of their projects in 2020, too.

CUSTOMER SEGMENTATION

DISTRIBUTORS

4%

COSMETICS

1%OTHER

2%

ACADEMIA

2%DIAGNOSTICS

1%

PHARMA

51%BIOTECH

39%

51+39+4+2+1+1+2