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 103,000 accounts, including labs involved in government and commercial research, for 170,000 chemical and biochemical and 45,000 equipment products it offers in its Sigma, Aldrich, Fluka and Supelco catalogs. The business derives revenues from two major areas: Research Chemicals (essentials, specialties, and biotech), and Fine Chemicals (commercial applications).
Sigma-Aldrich operates in almost 40 countries, and sells its products worldwide. The US accounted for 37% of 2012 revenues.
The company produces about 50,000 of chemical and biochemical products, representing 60% of its 2012 sales.
Small orders from labs (averaging around $400 each) account for 67% of the company's total net sales in 2012. Larger scale orders by the company's fine chemicals unit, SAFC, accounted for the 30%. The SAFC business unit supplies organic chemicals and biochemicals used for manufacturing by pharmaceutical, biotechnology, industrial, diagnostic, and electronics companies.
Sales and Marketing
Sigma-Aldrich's sales are divided among government institutions, nonprofits, universities, and pharmaceutical, diagnostic, and biotech companies. It also serves chemical companies, electronic companies, and hospitals.
The company’s revenues grew by 5% in 2012 thanks to acquisitions and organic growth. SAFC revenues increased by 17% thanks to higher demand for custom pharmaceutical products, volume increases in industrial cell culture media, and sales growth in bulk chemical products for manufacturing in the supply solutions business. Research chemical's revenues dropped by 1% due to foreign currency translation.
Sigma-Aldrich's net income increased by 1% in 2012 thanks to higher net sales and reduced R&D expenses due to lower costs (stemming from cost reduction activities), partially offset by higher costs of products and services sold.
To be more responsive to its customers, in 2013 the company restructured into three market-focused business units: Research (providing reagents and consumables to life sciences and non-profit research organizations); Applied (supplying raw materials and solutions for testing in clinical and industrial applications: and SAFC Commercial (providing manufacturing raw materials for commercial products).
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.
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.
Underlining its commitment to the Asia/Pacific electronics markets, in 2012 SAFC Hitech opened of a major facility in Kaohsiung, Taiwan, reinforcing Taiwan as a strategic regional hub from which to leverage Sigma-Aldrich's proprietary knowledge and capabilities as a leading provider of ultra-high purity metalorganic and silicon precursors for thin film deposition production processes for microelectronic and optoelectronic manufacturers
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 2012 the company acquired Maryland-based BioReliance, a global biopharmaceutical testing services company, for $350 million in cash. BioReliance provides toxicology and animal health testing to life science customers worldwide to help in drug development, manufacturing, and commercialization. The acquisition expands Sigma-Aldrich's product lines and technology platforms.
The company also picked up Wyoming-based Resource Technology Corp. (RTC) in early 2011 to expand its analytical chemistry offerings. RTC's products also complement Sigma-Alrich's own brands of analytical reagents (Supelco and Fluka) and other offerings.
That same year, the company acquired Brazil-based Vetec Quimica Fina to strengthen its position in Latin America. Vetec supplies specialty chemicals for the academic and industrial markets and provides some 3,000 products that support research, development, and manufacturing. The combination allows Sigma-Aldrich to broaden its Brazilian distribution channels.
State Farm owns about 12% of Sigma-Aldrich.