bioMérieux - First Quarter 2010 Business Review

Regulatory News:

bioMérieux (Paris:BIM), a world leader in the field of in vitro diagnostics, today released its business review for the three months ended March 31, 2010.

Net sales for the first quarter amounted to €307 million, up 6.4% at constant exchange rates and scope of consolidation (on a like-for-like basis) versus the first quarter of 2009.

⁽¹⁾ Including the Middle East and Africa

"bioMérieux’s sales increased 6.4% like-for-like in the first quarter of the year,” said Chief Executive Officer Stéphane Bancel. "Growth was especially strong in emerging markets, while more moderate in Europe and the United States. We confirm our objective of achieving around 7% organic sales growth in 2010, supported by our broad geographic diversification. Through recent acquisitions in China and partnership agreements with Philips, signed in this first quarter, and with Knome, announced today, we reaffirm our commitment to our ambitious strategic goals.”

SALES

Sales for the three months ended March 31, 2010 rose by 6.4% like-for-like, or by 6.5% including the recent Chinese acquisition of Meikang Biotech:

In traditional markets, factors such as the persistently poor economy in most countries, the low occurrence of seasonal flu, the end of the influenza A (H1N1) pandemic and the ongoing consolidation of clinical laboratories, were not very favorable for growth. In emerging markets, on the other hand, strong sales growth was reported, particularly in the "Emerging 7*”, where sales rose 34% like-for-like over the quarter.

Geographically, first-quarter like-for-like sales may be analyzed as follows:

• Sales in the Europe - Middle East - Africa region, which accounted for 57% of the consolidated total, increased by nearly 3% overall, with highly contrasted performance.
  • In Europe, the still challenging economy dampened sales growth in many countries, including Spain and the United Kingdom, as well as in Eastern Europe.
    
    In France, the Ballereau legislative order was published on January 15, 2010. In particular, it makes accreditation mandatory for clinical laboratories and encourages their consolidation and the creation of technical platforms. In this environment, bioMérieux sales remained stable in the first quarter, as growth in microbiology and high medical-value VIDAS^® reagents compensated for the decline in routine VIDAS^® tests.
    
    In Germany and the Netherlands, the microbiology business was impacted by the emergence of mass spectrometry for bacterial identification in laboratories handling high sample volumes.
    
    Growth was robust in most of the other European countries, particularly Italy and Portugal.
  • In the rest of the region, sales rose rapidly with particularly strong gains in the Middle East, Turkey (up 30%) and Russia (up 21%). Growth slowed in South Africa, however, where the local subsidiary’s contract as the exclusive supplier of reagents for HIV viral load measurement was not renewed by the National Health Laboratory Services. The €14 million a year contract will be phased out in the second quarter of 2010.

In clinical applications, growth was led by the VIDAS^® line, up 6.6%, despite the erosion in routine test sales. In particular, the VIDAS^® EBV assay has gotten off to a strong start. Sales of industrial applications rose by nearly 7%, boosted by robust instrument sales.

• Sales in North America (23% of the consolidated total) increased by nearly 3% in a market shaped by the financial difficulties of certain healthcare facilities and the uncertainty created by discussions of healthcare reform in the United States. The reform bill, which finally passed on March 23, is expected to extend medical coverage to some 32 million Americans who were previously uninsured. The new law, which is intended to improve the control of healthcare costs, should favorably impact the in vitro diagnostics market, despite the levy of a tax on medical device manufacturers effective January 2013. The tax is estimated to be approximately $5 million per year for bioMérieux.
  
  Sales in clinical applications were driven by strong instrument sales, in particular to replace the installed base of first generation VITEK^® systems. bioMérieux Inc. was also awarded a contract from a major U.S. customer to place VITEK^® systems at new sites in 2010. The VIDAS^® and NucliSENS^® reagents reported fast growth, but with only sporadic outbreaks of seasonal flu, sales of blood culture bottles were slow. Growth in industrial applications was led by the VIDAS^®, TEMPO^® and BacT/ALERT^® lines.
• The Asia-Pacific region (13% of the consolidated total) saw a nearly 25% increase in sales – the strongest growth reported for a single quarter in a decade. Boosted by accelerating demand, sales in China are experiencing intense growth, particularly in the microbiology and VIDAS^® lines. Sales in India and South Korea continued expanding at a rapid pace. In Japan, sales were stimulated by the introduction of new products and the application of international blood culture standards.
  
  Clinical application sales were led by the automated microbiology lines and the 30% gain in VIDAS^® sales.
• Sales in Latin America (7% of the consolidated total) continued to grow rapidly, rising 23.5%. All of the countries in the region achieved strong performances, particularly Brazil, where sales rose 23%, following new private laboratory contracts won in second-half 2009.
  
  Clinical applications benefited from the robust sales of reagents and instruments across almost every line. Industrial application sales rose by more than 50%, spurred by growing interest in automated techniques.

Like-for-like first-quarter 2010 sales may be analyzed by application as follows:

• Clinical application sales rose 5.8%, boosted by rising demand in emerging markets. The low incidence of seasonal flu impacted sales of blood culture bottles. Microbiology sales, however, benefited from fast-growing demand in the Asia-Pacific region and Latin America, as well as from the sales of VITEK^® instruments in North America. Sales of VIDAS^® reagents rose by 7.4%, thanks to the emerging markets and the success of high medical-value assays. In particular, from a study* of automated immunoassay analyzers by the College of American Pathologists, it can be concluded that the VIDAS^® range has the world’s largest installed base of any laboratory immunoassay system. Following the nearly 13% growth achieved in fourth-quarter 2009, industrial application sales continued to expand in first-quarter 2010, with a 9.6% gain. They were especially strong in the Asia-Pacific region and Latin America. During the period, performance was also driven by strong instrument sales.
• Instrument sales were up nearly 25% for the quarter, with particularly dynamic growth in both clinical and industrial applications. In all, they accounted for 9.4% of consolidated sales. Sales of reagents and services rose by around 5% over the period.

OTHER QUARTERLY FINANCIAL HIGHLIGHTS

• The Group had 6,447 full-time-equivalent employees as of March 31, 2010, following the consolidation of Meikang Biotech (132 employees) and Zenka in China and the closure of the Toronto facility in Canada (41 employees). There were 6,300 employees as of December 31, 2009.
• Net debt stood at €12 million at March 31, 2010, compared with €2 million as of December 31, 2009.
  
  As of March 31, 2010, there were no outstanding drawdowns on the Company’s €260 million syndicated line of credit, which expires in January 2013.
• Public-sector customer receivables are trending upwards in some countries, particularly in Southern Europe. Most of the invoices from public-sector customers in Greece are still unpaid and the corresponding receivables, net of provisions, are carried in the balance sheet for €23 million. Collection times have also increased in Spain and Portugal.

FIRST-QUARTER OPERATING HIGHLIGHTS

• New product launches
  
  During the quarter, bioMérieux launched three new reagents for industrial applications.
  
  In addition, the Company received 510(k) clearance from the U.S. Food and Drug Administration to commercialize its chromID™ VRE test for the screening of Vancomycin-Resistant Enterococci. The product’s launch in the United States reflects bioMérieux’s commitment to fighting bacterial resistance to antibiotics.
  
  In addition, in early April, PREVI™ Isola received the "2010 Medical Design Excellence Award” for contributions and advances in the design of medical products. Introduced in 2008, the PREVI™ Isola automated media streaker is a critical component of bioMérieux’s Full Microbiology Lab Automation (FMLA™) offering.
• Collaboration agreements
  • Collaboration with Philips
    
    In January 2010, Royal Philips Electronics and bioMérieux announced the signature of an agreement to jointly develop fully automated handheld diagnostic testing solutions for hospital use that can be deployed at the point-of-care (POC) - i.e. close to the patient. The collaboration aims to improve diagnosis and management of disease in critical care settings within hospitals (for example, Emergency Departments, Coronary Units and Intensive Care Units (ICUs)).
  • Collaboration with ExonHit
    
    ExonHit Therapeutics and bioMérieux are continuing to collaborate to develop blood biomarkers for the detection of prostate cancer. Their colon cancer program has been terminated, since the results did not reach the expected level of performance.
  • Collaboration with Cepheid
    
    Cepheid and bioMérieux have mutually agreed to end their collaboration in the field of sepsis. The technical performance of the product under development was similar to existing solutions and the product did not show sufficient commercial viability. However, sepsis will remain a strategic focus of bioMérieux, aiming to bring critical diagnostic information to physicians much sooner than with currently available methods.
• Acquisitions
  • Acquisition of Meikang Biotech (China)
    
    In January 2010, bioMérieux announced the acquisition of rapid test manufacturer Meikang Biotech and its production plant in Shanghai. This major step reinforces bioMérieux’s position in the point-of-care and rapid test markets in both emerging and developed countries, and gives it fully-owned, integrated manufacturing and R&D capabilities in China. bioMérieux plans to establish its Greater China headquarters, as well as its Asia-Pacific office and certain corporate functions at the new site in 2010.
  • Acquisition of Shanghai Zenka Biotechnology (China)
    
    As part of its development plan in China, bioMérieux acquired Zenka, a company which has all of the authorizations to market in China the principal culture media used by microbiological labs. Based in Shanghai, the company currently employs 10 people and does not yet generate significant revenues.
• Closure of the PML Microbiologicals’ prepared culture media plant in Toronto, Canada
  
  According to plan, the site was closed in March and prepared culture media production was transferred to plants in Lombard, Illinois and Portland, Oregon (USA).

INVESTOR CALENDAR

June 10, 2010: Annual Shareholders Meeting
July 22, 2010: Second Quarter Sales

The above forward-looking statements are based, entirely or partially, on assessments or judgments that may change or be modified, due to uncertainties and risks related to the Company’s economic, financial, regulatory and competitive environment, notably those described in the 2008 Registration Document. Accordingly, the Company cannot give any assurance nor make any representation as to whether the objectives will be met. The Company does not undertake to update or otherwise revise any forecasts or objectives presented herein, except in compliance with the disclosure obligations applicable to companies whose shares are listed on a stock exchange.

ABOUT BIOMÉRIEUX

Advancing Diagnostics to Improve Public Health

A world leader in the field of in vitro diagnostics for over 45 years, bioMérieux is present in more than 150 countries through 39 subsidiaries and a large network of distributors. In 2009, revenues reached €1,223 million with 85% of sales outside of France.

bioMérieux provides diagnostic solutions (reagents, instruments, software) which determine the source of disease and contamination to improve patient health and ensure consumer safety. Its products are used for diagnosing infectious diseases and providing high medical value results for cancer screening and monitoring and cardiovascular emergencies. They are also used for detecting microorganisms in agri-food, pharmaceutical and cosmetic products.

bioMérieux is listed on the NYSE Euronext Paris market (Symbol: BIM – ISIN: FR0010096479).

Other information can be found at www.biomerieux.com.

* Emerging 7: Brazil, China, India, Indonesia, Mexico, Russia, Turkey

* College of American Pathologists: Automated Immunoassay Analyzers (June 2009)