Global biotech giant CSL is among AMCIL's top holdings and one of the largest companies on the ASX. Our team recently visited CSL’s operations in Europe, engaging with various industry contacts and competitors. Portfolio Manager David Grace shares his key insights.
CSL’s growth in earnings in FY23 reaffirmed its position as a key investment for AMCIL and its strong industry leadership, exceptional management, and solid balance sheet align with the qualities we seek in our investments.
During our visit in May, we gained valuable insights from the company regarding their strategic plans and future prospects. CSL operates three businesses: global therapeutics leader CSL Behring which develops medicines primarily to treat haemophilia and immune deficiency; influenza vaccine company CSL Seqirus, and the recently acquired specialty pharmaceuticals company CSL Vifor which specialises in iron deficiency.
Prospects for CSL are promising
During our visit, we toured CSL Behring’s manufacturing and research facilities. The company is seeking to improve profitability in its manufacturing process through significant investment in upgrading these facilities.
A focal point of discussion revolved around CSL's $US11.7 billion acquisition of Vifor Pharma in August 2022. Vifor has global leadership in the field of renal disease and iron deficiency. The nephrology (treatment of kidney disease) market, driven by an ageing population and increased prevalence of risk factors like diabetes and heart disease, is experiencing rapid growth.
Our team also had the opportunity to meet consulting nephrologists who were familiar with both CSL's products and competing offerings. This has further cemented our confidence that, with CSL’s focus on the growing demand for the treatment of renal disease and iron deficiency, the company is well positioned to maintain strong growth.
CSL well placed for long-term growth
Reduced patient mobility during the pandemic resulted in lower blood plasma donations which did have an impact on CSL’s earnings growth.
Despite the challenges, CSL was able to continue investing in production facilities, R&D, and improving manufacturing processes, thanks to its strong balance sheet and high levels of cash generation.
With blood plasma levels now returning to pre-pandemic levels, coupled with improvements to CSL’s manufacturing processes, the company is in a strong position.
We firmly believe that CSL's strong earnings growth will persist over the medium-to-long term, solidifying its position as an invaluable investment for AMCIL.