Check the shelves of any research (or mad) scientist and you'll likely find Sigma-Aldrich's chemical products. The company is a leading supplier of chemicals to research laboratories. It has more than 100,000 accounts, including labs involved in government and commercial research, for 250,000 chemical and biochemical and 46,000 equipment products it offers in its Sigma, Aldrich, Fluka and Supelco catalogs. It makes about 114,000 of the products it sells. The business derives revenues from two major areas: Research Chemicals (essentials, specialties, and biotech), and Fine Chemicals (commercial applications). In 2015 the company was acquired by Germany-based pharmaceutical giant Merck for $17 billion.
Sigma-Aldrich operates in 37 countries, and sells its products to about 160 countries worldwide. The US accounted for 38% of 2014 revenues.
In 2013 the company realigned its business structure into three market-focused business units that are defined by the customers and markets they serve: Research, Applied, and SAFC Commercial.
Research products and services include chemicals, reagents and kits, enable scientists to discover and develop new drugs and materials.
Applied products and services include high quality components and kits, chemical reagents, critical raw materials and certified reference standards, provide customized solutions to and constitute critical components and materials for diagnostic companies, testing laboratories and industrial companies;
SAFC Commercial helps customers develop and manufacture product and services commercial production of pharma, biopharma and electronics products. Products and services include media and critical raw materials for industrial cell culture, contract manufacturing services, pharmaceutical safety testing services, and organometallic precursors for semiconductor manufacturing.
Research and Applied business units (with an average order size $500) accounted for 75% of Sigma-Aldrich's net sales in 2014. The SAFC Commercial business accounted for the balance.
The company's own products accounted for 60% of 2014 sales.
Sales and Marketing
Sigma-Aldrich's sales are divided among government institutions, nonprofits, universities, and pharmaceutical, diagnostic, biotech companies, and individual customers. It also serves chemical companies, electronic companies, and hospitals.
The company’s revenues have seen steady growth between 2010 and 2014. In 2014 Sigma-Aldrich's net revenue increased by 3% due to higher sales frpm its Applied and SAFC Commercial business units. Applied increases came from higher sales to customers in the Diagnostic and testing markets; SAFC Commercial increases were due to organic growth, led by Life Science Products and Life Science Services businesses.
In 2014 the company’s net income increased by 2% as a result of higher sales and organic growth.
Sigma-Aldrich's company’s cash inflow decreased by 0.2% in 2014 due to changes in working capital as a result of changes in payment of income taxes, inventories and accounts payable.
Sigma-Aldrich is looking to improve sales growth by continuing to focus on its customers, while taking advantage of an improved government funding environment and higher growth in emerging markets. To better serve its customers, Sigma-Aldrich also strives to maintain sufficient supplies of its products, routinely ship the same day of order, and provide prompt customer service. It also forms and maintains strategic alliances and distribution arrangements with partners to acquire, maintain, and increase its sales. Sigma-Aldrich seeks growth both organically and through acquisitions.
In 2015 the company’s main focus is to increase geographic coverage, particularly in Asia/Pacific region, pursuing new and innovative technologies and expanding product and service offerings organically and through strategic acquisitions.
That year Sigma-Aldrich opened its Asia/Pacific headquarters and Cell Culture Technical Center in Singapore to support the customers of its SAFC Commercial business in biopharmaceutical development and manufacturing.
In 2015 the company signed a global distribution agreement with Roche. The deal allows the company to provide more customers with access to high-quality Roche Biochemical Reagent products through Sigma-Aldrich's expanded eCommerce and distribution networks.
In 2014 it launched a comprehensive portfolio of more than 600 Flavors and Fragrances calibration standards and Certified Reference Materials aimed at the food and beverage and cosmetic markets to better ensure product quality and safety. The new organic compounds are designed for analytical instrument calibration, an important role in determining the composition of consumables.
In 2013 SAFC Commercial, its custom manufacturing services business unit, teamed up with CatScI Ltd., a UK-based catalysis company focused on maximizing yield, optimizing quality, reducing waste and minimizing chemical development costs through reaction understanding. The strategic partnership combines CatScI's extensive expertise in catalyzed reactions and complex chemical processes with SAFC's strength in process development, scale-up and manufacturing of high-value products.
That year SAFC Commercial also expanded production at its Arklow, Ireland, facility to include new PharmaGrade products.
As a part of expanding in a new market, in 2013 its SAFC Hitech unit agreed to form a joint venture with Korean-based Soulbrain Co. Ltd. Known as Soulbrain Sigma-Aldrich, the newly formed JV will serve the Korean market and will focus on advanced metal organic precursor technologies used in the semiconductor and LED markets.
In another strategic alliance, in 2013 the company signed an agreement with Paragon Scientific to help develop Paragon's product range and to expand availability of Paragon's calibration standards and certified reference materials through Sigma-Aldrich sales and marketing channels.
Mergers and Acquisitions
In 2014 Sigma-Aldrich acquired California-based Cell Marque , an industry-leading provider of in vitro diagnostic (IVD) antibody reagents and kits. Cell Marque's products and technical expertise, include validated, fit-for-purpose antibodies and IHC staining kits aimed at pathologists and clinicians focused on patient management.