LGC has reported that H1 like-for-like growth is softer than expectations due to macroeconomic headwinds predominantly impacting our Genomics segment. These headwinds are not isolated to LGC and predominantly result from cash and inventory management by certain customers adjusting to a post-Covid and high interest rate environment. We expect these headwinds to moderate over the second half of the year to 31 March 2024. LGC’s portfolio has always demonstrated resilience and these headwinds are partially countered by robust growth in our Quality Assurance segment and cost management actions.
Key highlights for the six months to 30 September 2023
Horizon: LGC’s Growth Strategy
Following the launch of our Horizon programme in FY23, we continued to implement an ambitious multi-year programme of activities to accelerate our Group’s growth and ensure continued success. The programme’s six strategic pillars are: Focused, Growth Oriented, Scalable, Sustainable, High Performance and Acquisitive.
Focused: We have thrived through building differentiated solutions in carefully identified life science tools market segments, where we believe we can build sustainable competitive advantage. In each case, we seek to serve segments which have attractive, long-term growth characteristics where we have achieved a leading position or have a clear path to do so. This focus and simplification of our operating model enables us both to prioritise investments and provides capital to invest back into the rest of the Group.
Growth Oriented: During the first half of FY24, we continued to focus on scientific, operational, and commercial capabilities, prioritising investment in those areas of greatest customer need. In the US, expansion of our Clinical Diagnostics facilities at Gaithersburg and Maine have made excellent progress, and both build out projects are expected to be completed and fully operational before the end of December 2023. We also increased our oligonucleotide therapeutics footprint, expanding our team of experts across LGC Axolabs’ sites in Kulmbach, Germany and Petaluma, US. As part of this commitment, we are in the process of constructing a new, c.90,000 sq. ft. GMP manufacturing facility in Berlin, Germany. In Toronto, Canada, a new synthetic chemistry centre of excellence is also progressing, with an expected opening date in 2024.
Scalable: Following the announcement of a new strategic partnership with Tata Consulting Services (TCS) in January 2023, we have continued to simplify and scale our IT, HR and Finance support services and systems. Over time, this partnership promises to deliver significant efficiency and effectiveness benefits across our support services, as colleagues continue to transition to this new model and different ways of working.
Sustainable: Progress on our ESG agenda Environmental, social and governance (ESG) criteria are central to our purpose – Science for a Safer World. In August, we published our latest ESG report for the year ending 31 March 2023, our third using the Global Reporting Initiative (GRI) framework. This report is structured around our Purpose, People, Planet and Products and included the latest progress update against our ESG KPIs, which focus on renewable electricity; employee engagement; gender diversity; sustainable packaging; responsible procurement and our commitment to be carbon net zero by 2050.
Acquisitive: Kova International
In July 2023, we announced the acquisition of Kova International, a leading developer and manufacturer of in vitro urinalysis and toxicology quality control products for clinical laboratories. The acquisition grows LGC Clinical Diagnostics’ portfolio in the clinical quality control space, complementing a breadth of existing capabilities across biochemistry, serology, molecular, and clinical genomics quality controls and reference materials.
Research and Academic Partnerships
In April 2023, we announced the launch of the Northern Cell Metrology (NML) Hub, a new laboratory centre for clinical diagnostics and medical technology, located at the University of Leeds innovation community, Nexus. The Hub, which represents a new home for the NML’s existing cell metrology capabilities in the UK and is part of our strategic partnership with the University of Leeds, will support the health and life science industries achieve safe, reliable, and productive solutions through the development of innovative technology for the standardisation of measurements for the analysis of cells, using flow cytometry and advanced bio-imaging techniques.
Governance
David P. King appointed as Non-Executive Chairman of LGC’s Board of Directors
In September 2023, we announced the appointment of David P. King as Non-Executive Chairman of the Board of Directors. David served for nearly 13 years as Chairman & CEO of LabCorp, where he spearheaded the company’s transformation from a pure-play clinical laboratory into a global leader in life sciences, tripling the size of the company to more than $11.5 billion in revenue and almost 65,000 employees.