CSL’s US plasma collection fleet will switch to the newly approved Rika apheresis device that is more efficient and lower cost than the current collection process.
The Rika Plasma Donation System, developed by Terumo, has been approved by the US FDA. This system is approximately 30% faster (each collection will take 35 minutes or less) at collecting blood plasma from donors and using a personalised collection target will capture more than 8% higher plasma yield for a net 14% lower cost. The Rika device uses a clever continuous plasma extraction process ensuring that no more than 200ml of blood is outside the donor’s body at any one time. The plasma separation process overlaps the draw and return process.
The faster process also reduces donor time and centre bed turn by more than 15 minutes.
CSL will commence a 1-year rollout to transition its collection centres to the new device commencing in Denver, Colorado where Terumo is based. CSL has more than 300 US centres contributing to the raw plasma pool.
Although plasma collection volumes are ‘inching back’, the Rika device makes the recovery pathway to pre-COVID levels more certain. The plasma gains are not immediate, but the de-risking of the recovery now is.
We estimate the year-on-year gain in CSL collection over 1QCY21 is currently more than 21%, but this is still down by more than 10% compared to pre-COVID levels. We currently anticipate the collection recovery to CY19 levels by mid-CY22. The rollout of the new devices will support a return to growth enabling collections to exceed CY19 levels by FY23f.
Investment view
CSL’s 1H22 result delivered about 80% of reaffirmed FY22 net profit guidance, still set at US$2.15-2.25 billion. This seems extraordinarily conservative even allowing for the yet to be settled Vifor transaction and the emerging recovery in plasma collection volumes.
Consensus forecasts appear light, in our view and hence the PE ratio of 43x FY23f is unrealistically high. We anticipate a guidance upgrade that will require double-digits to reflect reality.
Risks to investment view
There is some execution risk for the Vifor Pharma acquisition with completion not expected until the middle of CVY22. Global blood products markets have been impacted (plasma collections) and this may also present challenges if further variants emerge causing disruptions.
Recommendation
We have retained our Buy recommendation.
