Eurofins Scientific S.A.

rue Pierre Adolphe Bobierre, BP
Nantes
F-44323 Cedex 3
France
Telephone: ( +33) 2 51 83 21 00
Fax: ( +33) 2 51 83 21 11
Web site: http://www.eurofins.com

Public Company
Incorporated: 1987
Employees: 2,083
Sales: EUR 175.5 million ($230 million) (2004)
Stock Exchanges: Euronext Paris Frankfurt
Ticker Symbol: 3825
NAIC: 541380 Testing Laboratories; 541710 Research and Development in the Physical Sciences and Engineering Sciences; 621511 Medical Laboratories

France's Eurofins Scientific S.A. is a world-leading provider of biotechnology-based testing and analytical support services. The company has developed some 10,000 analytical methods for testing, analyzing, and identifying biochemical components in foods, pharmaceuticals, and other chemicals as well as in fertilizers, pesticides, and the environment. Through analysis, the company is able to prove a substance's authenticity, such as distinguishing between natural and artificial vanillin, and trace its origin. The company's testing methods also permit the identification of various component elements and the presence of bacteria and other health-risk related substances such as dioxins and prions, which have been associated with mad cow disease. In addition to product testing services, the company provides research and development services. Eurofin's client base includes most of the world's largest food, consumer product, and pharmaceutical groups. The company supports its international client base with a network of some 40 laboratories operating in 13 countries. More than 80 percent of the group's sales are generated outside of France. Major markets include Germany at nearly 19 percent of sales, Scandinavia at nearly 18 percent, North America at more than 16 percent, the Benelux countries at 15 percent, and the United Kingdom and Ireland at 8 percent. Founded in 1987, Euronfins has grown rapidly, primarily through a series of acquisitions. In 2004, the company's sales topped EUR 175 million ($230 million). Eurofins is listed on the Euronext Paris and Frankfurt Stock Exchanges. Founder Gilles Martin remains the company's CEO and chairman. The Martin family is also the company's largest shareholder, with more than 55 percent of its stock.

Turning Wine into a Winner in the 1980s

The importance of wine to France's culture, and to its economy, stimulated demands for methods for ensuring the quality and integrity of French wines. The use of certain substances, such as sugar and milk, was therefore outlawed. In the case of sugar, a natural component in the winemaking process, the ban on sugar additives was directed in large part in order to protect the interests of France's grape growers.

Given this context, researchers had developed a variety of analysis methods for testing wines for their purity. Among those working on developing new testing procedures were Maryvonne and Gérard Martin, a husband-and-wife research team at the University of Nantes, close to the Loire Valley wine-growing region. In the mid-1980s, the Martins succeeded in creating and patenting a new and more accurate analysis method. They labeled the method SNIF-NMR, for Site Specific Natural Isotope Fractionation Studied by Nuclear Magnetic Resonance. The use of NMR technology enabled the Martins to examine the chemical composition of wine at a molecular level and thereby determine the nature of its components based on their atomic isotopes.

The patent for the method initially belonged to the University of Nantes. In 1987, however, the Martins' son, Gilles Martin, just then completing a doctorate in mathematics and statistics, decided to establish a company in order to exploit his parents' testing method. Martin bought the patent from the university and set up his business, called Eurofins (in French, SNIF is written as FINS). The company started with just 12 employees. By the end of its first year, Eurofins' sales reached the equivalent of EUR 300,000.

An important turning point for the company came with its successful expansion of the basic SNIF-NMR technique to a wider array of substances. By 1989, the company's range of testing applications included non-alcoholic beverages, fruit juices, and flavorings. The wider array of products the company could test now enabled it to enter the food industry. By 1991, Eurofins's sales had risen to EUR 1.4 million.

While making inroads in France's market for both wine and food analysis, Martin, joined by younger brother Yves-Loic, quickly steered the company's focus to the international market. For this effort, the company at first targeted the creation of a sales and marketing network, setting up subsidiaries in such markets as the United Kingdom, Germany, and the Czech Republic. In 1993, Eurofins entered the United States, establishing Eurofins USA. The company's U.S. presence was boosted in 1996 when the Association of Analytical Communities (AOAC) officially approved SNIF-NMR for use in analyzing fruit juice. By then, the company's sales had climbed to the equivalent of EUR 3.5 million.

Acquiring Scale in the 1990s

Rising food safety concerns buoyed Eurofins in the mid-1990s. The first case of BSE, or "mad cow disease" in the United Kingdom sparked a panic in the food industry across the European continent. Later scandals, including dioxin contamination in Belgium, the presence of benzene in Perrier Water, outbreaks of potentially deadly bacteria such as listeria and E.coli, and the contamination of cans of Coca Cola in France and Belgium, as well as the spread of BSE to the European continent, added to food industry worries. The discovery of genetically modified corn in consumer-oriented foods, as well as the presence of antibiotics and growth hormones, which are banned in Europe, further fueled the demand for sophisticated testing and analysis procedures.

In response to the increasing demand for food and pharmaceutical testing procedures, Eurofins entered a new growth phase. The company now launched a series of acquisitions lasting into the mid-2000s. In 1997, the company made its first acquisition, buying up Nutrition International and Product Safety Labs in the United States. The first purchase whetted Eurofins' appetite for growth, and in October 1997 the company turned to the public market for capital to fuel its expansion, listing on the Euronext Paris Stock Exchange. By the end of that year, the company had expanded again, setting up its own laboratory in the United Kingdom.

Eurofins boosted its U.K. presence in 1998, adding three more companies that were subsequently merged into its existing subsidiary to form Eurofins Scientific Ltd. The company also turned to Germany, soon to become its single largest market, buying its first laboratory in Berlin-Teltow, then acquiring Institut für Lebensmittel, Wasser und Umweltanalytik, based in Nuremberg, and Labor Dr. Hallermayer GmbH in Augsburg. Before the end of that year, the company had also purchased a major stake in Hamburg's Wiertz Eggert Jörissen GmbH, later boosting its holding to 100 percent. This acquisition also proved significant in expanding Eurofins' range of operations to include testing for contaminants such as pesticides and mycotoxins.

Similarly, in 1999, Eurofins acquired the Alpha Chemical and Biomedical Laboratories, based in California, adding its capacity for analyzing botanicals and nutraceuticals. Back in France, the company added the catering and pharmaceuticals markets to its list of clients with the purchase of Ecobio, near Paris. Another French acquisition, Laboratoire d'Analyses et d'Etudes Industrielles, brought the company to the south of France that year. With two more acquisitions, in Paris and Poitiers, Eurofins became the leading food safety testing and analysis groups in France. By then, the company's sales had soared past EUR 32 million.

Global Leader in the 2000s

In 2000, Eurofins boosted its U.S. position, acquiring Woodson Tenent Laboratories in Memphis, Tennessee. The company also entered Switzerland, acquiring three companies there that were subsequently merged to form Eurofins Scientific AG in that country. Next, the company turned to the Benelux market, buying up Analytico Food BV in Heerenveen, the Netherlands. Another new market opened up to the company with the purchase of 51 percent of Mikjo-Kemi, which operated ten laboratories in Denmark, Norway, and Germany.

The company also acquired a controlling share of Dr. Specht & Partner in Hamburg. Reflecting the group's growing presence in the German market, Eurofins launched a secondary offering on the Frankfurt Stock Exchange that year. By the end of 2000, the company's acquisitions included Celab AG in Switzerland and Gesellschaft für Arbeitsplatz- und Umweltanalytik (GfA) mbH, operating in Munster, Germany, and Orleans, France. This purchase enabled Eurofins to claim the European leadership in analysis of toxic contaminants.

New food tracking regulations encouraged the group to gain expertise in DNA sequencing and genotyping, in part through the acquisition of majority control of Germany's Medigenomix in 2001. In that year, Eurofins carried out a DNA traceability study on more than 14,000 cows in France. The company also met the growing alarm over the potential presence of genetically modified (GMO) components in the food chain with its GMO detection system, GMO Platinum Assay, worldwide. By the end of 2001, the company sales had soared again, topping EUR 127 million. That placed Eurofins as the fourth fastest-growing company among Europe's top 500 in the second half of the 1990s.

Eurofins continued to add to its expertise into the 2000s, buying Okometric in Germany in 2002 and Genescan in 2003. The Genescan purchase, which added operations in Germany, the United States, Hong Kong, and Brazil, placed Eurofins as the world's leader in the GMO testing market.

Company Perspectives:

OUR VISION: To be the World Leader in the Bioanalytical Market. OUR MISSION: To Provide High Quality Analytical Services to All Our Customers and to Generate Sustainable Shareholder Value.

With the 2003 launch of Aller-Gene, the market's first multi-allergen PCR (polymerase chain reaction) screening test, Eurofins positioned itself as a "one-stop shop" for testing services and procedures. The company had also begun developing an outsourcing arm, taking over the research, testing, and analysis operations for third parties, including a nutritional assay out-sourcing agreement with Glon Sanders reached in 2002.

By the end of 2004, Eurofins had consolidated its position as a global leader in the testing and analysis segment, with more than 10,000 procedures in its portfolio and sales topping EUR 175 million. The company counted most of the world's biggest food and pharmaceutical groups as clients. Meanwhile, Eurofins continued to look for new acquisition opportunities. In January 2005, for example, the company completed its acquisition of a 25 percent stake in Germany's MWG-Biotech. Eurofins had prepared itself to benefit from the rising health and safety concerns focused on the world's food, agro-industrial, chemical, and pharmaceuticals industries.

Principal Subsidiaries

ADME Bioanalyses SAS; Analytico Food BV (Netherlands); Analytico Medinet BV (Netherlands); Analytico Milieu BV (Netherlands); Analytico Milieu NV (Belgium); Dr Specht & Partner GmbH (Germany); ES Développement SAS; Eurofins (NI) Ltd. (Northern Ireland); Eurofins Analytics GmbH (Germany); Eurofins Danmark A/S (Denmark); Eurofins Environnement SAS; Eurofins Scientific (Ireland) Ltd.; Eurofins Scientific AG (Switzerland); Eurofins Scientific Analytics SAS; Eurofins Scientific Biosciences SAS; Eurofins Scientific BV (Netherlands); Eurofins Scientific GmbH (Germany); Eurofins Scientific Inc. (United States); Eurofins Scientific Ltd. (United Kingdom); Eurofins Scientific Ltd.; Eurofins Scientific Test Center SAS; Eurofins Sverige AB (Sweden); Eurofins Ventures BV; Eurofins Ventures BV (Netherlands); GeneScan Analytics GmbH (Germany); GeneScan do Brazil Ltda.; GeneScan Europe AG (Germany); GeneScan Hong Kong Ltd.; GeneScan USA Inc; GfA mbH (Germany); Le Chardonnay Sci; Medigenomix GmbH (Germany); M-Lab AS (Norway).

Principal Competitors

GenTek Inc.; Altera Corporation; IDEXX Laboratories Inc.; Groupe SGS France; RWTUV AG; ENUSA Industrias Avanzadas S.A.; Core Laboratories Inc.

Key Dates:

1987:

Gilles Martin launches Eurofins Scientific in order to exploit the SNIF-NMR testing procedure developed by his parents; the company's original market was for detection of presence of sugar in wine.

1989:

Eurofins expands its technology to include the testing of non-alcoholic beverages and flavorings.

1993:

The company creates a sales subsidiary in the United States.

1997:

The company lists on the Euronext Paris Stock Exchange and makes its first acquisition when it purchases Nutrition International and Product Safety Labs in the United States.

1998:

The company enters Germany, which later becomes company's largest single market.

2000:

The company enters the Swiss, Benelux, and Scandinavian markets.

2001:

The company launches GMO Platinum Assay for detecting the presence of genetically modified (GMO) food components.

2003:

The company acquires Genescan, with laboratories in Germany, United States, Hong Kong, and Brazil.

2005:

The company acquires 25 percent of MWG-Biotech Ag in Germany.

Further Reading

"Eurofins," Business Week, October 25, 2004, p. 56.

"Eurofins Buys Majority of GeneScan AG," Feedstuffs, July 28, 2003, p. 6.

"Eurofins Maintains Growth with Frankfurt Dual Listing," Euroweek, October 13, 2000, p. 17.

"Eurofins Scientific Acquires 51% of Dutch Firm, Analytico Food," Fund Action, September 20, 2000.

"Eurofins Scientific a les moyens de sa croissance," L'Expansion, December 4, 1997.

"GeneScan do Brazil Gets Ministry Accredition," Nutraceuticals International, July 2003.

Pinaud, Olivier, " 'Nous sommes optimistes pour la suite de l'année.' " Investir, August 29, 2001.

—M.L. Cohen