Siemens redoubles efforts to make smart medicines
GERMAN engineering group Siemens is redoubling its efforts in an area where it has traditionally lagged – managing the processing of materials into medicines, chemicals or foodstuffs.
Siemens excels at helping makers of cars, planes and trains make their production and assembly smarter by using its software to create distinct items and components – socalled discrete manufacturing.
But when it comes to process industries such as petrochemicals, Siemens has been at a disadvantage to rivals such as industrial machinery and controller makers Honeywell or ABB, which have longer-standing relationships with major oil and gas players.
Now Siemens is investing in the technology used to control mixing, heating, and pressurising ingredients in the process industry – enabling the smallbatch and hybrid production of products like drugs, where personalised and niche products are becoming more common.
“We have been developing very well, and have been gaining market share,” said Eckard Eberle, Siemens’s head of process automation.
Under a new strategy likely to be announced today along with quarterly results, analysts expect Siemens to announce it is incorporating process automation within its broader factory automation business, which aims to digitise and streamline production for clients to improve efficiency.
Intention
“The market in process automation is growing at around 3 to 4 percent a year and our intention is to grow faster than that,” Eberle said in an interview at the division’s offices in Karlsruhe, Germany. “We are doing that already.”
Siemens, one of Germany’s most famous industrial names, was founded in 1847, and is active in electrification, automation, industrial software and the manufacture of products from trains to turbines.
The Munich-based company, employs 377 000 people worldwide and generated revenue of €83 billion (R1.28 trillion) in 2017.
Unlike the Digital Factory division, which houses Siemens’s discrete manufacturing software and has been the star performer, Process Industries and Drives (PID) has been one of the weakest-performing divisions.
PID, which represents about 10 percent of group sales, saw its revenue fall 1 percent last year, while orders grew by only 2 percent. It also had the second-lowest operating profit margin, at 5 percent, less than half the overall 11.2 percent.
But analysts reckon Siemens has a decent chance of success at galvanising its process automation business.
“With large-scale process automation, such as downstream oil and gas, there are not many greenfield opportunities and the incumbents sitting on a large installed base have a clear advantage,” said James Stettler of Barclays.
“With more smaller batch manufacturing and hybrid projects there’s more contracts around to go for.”
At present Siemens has a 15 percent share in the $14bn global market for distributed control systems – the computer “brains” which oversee production – lagging market leaders ABB and Honeywell, according to ARC, an industrial analyst company.
One such opportunity that Siemens has grasped is at German biotech company BioNTech, which enlisted Siemens to help develop personalised anti-cancer treatments made with just a few drops of medicine rather than mass producing thousands of litres.
The Mainz-based company, which is working with Roche’s Genentech arm, uses Siemens software to produce trial batches of drugs which identify and attack cancerous cells.
“Each person’s cancer is 95 percent different, so the target is to produce medicines for the individual in only small quantities which enable the immune system to attack their specific cancer,” said Sierk Poetting, BioNTech’s chief operating officer.