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 230,000 chemical and biochemical and 45,000 equipment products it offers in its Sigma, Aldrich, Fluka and Supelco catalogs. It makes about 110,000 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 2014 the company agreed to be acquired by Germany-based pharmaceutical giant Merck for $17 billion.
Sigma-Aldrich operates in 37 countries, and sells its products worldwide. The US accounted for 38% of 2013 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 helpd customers develop and manufacture product and services commercial production of pharma, biopharma and electronics products. Products and services include industrial cell culture media, active pharmaceutical ingredients, intermediates, raw materials, biological testing services and organometallic precursors for LED and semiconductor manufacturing.
Research and Applied business units (with an average order size $500 dollars) accounted for 75% of Sigma-Aldrich's net sales in 2013. The SAFC Commercial business accounted for the balance.
The company's own products accounted for 60% of 2013 sales.
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.
In 2013 the company’s revenues increased by 3% due to a 7% rise in the SAFC Commercial sales as a result of higher growth in Life Science Products and Services business, most notably its custom pharmaceutical manufacturing and industrial cell culture media products. SAFC Commercial's organic sales growth was led by the Americas and EMEA regions. Applied revenues increased by 5% due to higher sales to customers in the Diagnostic and Testing markets, where its products are used as critical components for diagnostic kits and sales of standards and certified reference materials to clinical testing laboratories.
Sigma-Aldrich’s revenues grew by 7% in 2013 due to higher sales and a decline in the provision for income tax.
In fiscal 2013 the company’s operating cash inflow increased to $641 million (from $567 million in 2012) due to higher net income and a change in operating assets and liabilities.
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 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, hteamed 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.
State Farm owns about 12% of Sigma-Aldrich.