Sebia

Activity
In-vitro diagnostics – Protein testing
Acquired
Jun 2010
Realised
Dec 2014
Sector
Healthcare

Business
Sebia is the worldwide leader in clinical electrophoresis equipment and reagents. Its systems analyse proteins in order to detect various diseases and conditions, primarily myeloma, which typically affects people who are over 50 years old. Sebia is a global business and generates over 80% of its sales outside France.

The company sells machines to private and public testing laboratories and has a large installed base of around 11,800 instruments. Sebia's instruments run on Sebia's proprietary reagents, which account for the bulk of its sales: 78% in 2012. This 'razor / razorblade' business model provides a highly stable, predictable revenue base.

Sebia's high growth rate has been driven by (i) growth in its market, which is underpinned by long-term trends including ageing populations, an increase in the number of people being monitored, price increases, and product improvements, and (ii) gains in market share resulting from Sebia's superior technology, the effectiveness of its sales force and the high standard of service it provides.

Strategy
Cinven's strategy, developed in conjunction with the existing management team, is to further develop Sebia's successful business model by:

  • taking full advantage of the growth opportunities presented by an expanding market;
  • upgrading customers to improved, higher-value systems;
  • further increasing its market share in countries such as Germany and the USA through its superior technology and customer service;
  • launching new detection tests for proteins such as HbA1c, Hb and CDT that can be run on its installed base of machines, offering significant additional growth potential; and
  • accelerating growth in emerging markets, taking advantage of the opportunities identified by Cinven's Portfolio team in Asia.

As the previous owner of Phadia, the leading allergy and autoimmunity diagnostics business exited in May 2011, Cinven had experience of the high-value in-vitro diagnostics industry. Although Phadia and Sebia were standalone investments, there were many similarities between the two investment strategies, allowing both businesses to benefit from shared ownership.

Progress
Under Cinven ownership Sebia has already increased its market share significantly and its sales in the US through a combination of organisational improvements and commercial strategy redefinition, led by the new US MD appointed in March 2011. Sebia is also diversifying its test portfolio, with the successful launch of Hb1Ac test for diabetes, as well as Hb and CDT tests. All these tests can be run on the Sebia installed base of machines, offering significant incremental growth potential.

In December 2014, Cinven announced the completion of the sale of Sebia, for €1.4bn to a consortium led by Montagu Private Equity and Astorg Partners. The transaction represents a 2.4x return on Cinven’s original investment.