Grifols Stock

Grifols, S.A. operates as a global specialty plasma therapeutics company.

The company engages in developing, manufacturing and distributing a broad range of biological medicines based on plasma derived proteins. Plasma derivatives are proteins found in human plasma, which once isolated and purified, have therapeutic value. These protein-based therapies extend and enhance the lives of individuals who suffer from chronic and acute, often life-threatening, conditions, including primary and secondary immunological deficiencies, Chronic Inflammatory Demyelinating Polyneuropathy (‘CIDP’), A1PI deficiency and related emphysema, immune-mediated ITP, Guillain Barre syndrome, Kawasaki disease, allogeneic bone marrow transplants, hemophilia A and B, von Willebrand disease, traumatic or hemorrhagic shock and severe burns. In addition, the company has built a diagnostic business that focuses on researching, developing, manufacturing and marketing in vitro diagnostics products for use in clinical and blood bank laboratories. The company also specializes in providing infusion solutions, nutrition products and medical devices for use in hospitals and clinics.

The company’s products and services are used by healthcare providers in over 100 countries to diagnose and treat patients with hemophilia, immune deficiencies, infectious diseases and a range of other medical conditions; and the company has a direct presence, through the operation of commercial subsidiaries, in over 30 countries.

The company is a leading producer in the industry in terms of total sales globally. The company has a top three market position in various segments of the plasma derivatives industry, including A1PI, IG and albumin, as well as in terms of plasma collection centers and fractionation capacity.

The company organizes its business into five business units: Plasma Procurement, Biopharma, Diagnostic, Bio Supplies and Others.

Plasma Procurement: The Plasma Procurement business unit includes all activities relating to plasma collection, including the evaluation and screening of plasma donors and the operation of the company’s plasma collection centers. The company’s Plasma Procurement business unit has no revenues, as all plasma collected in the company’s facilities is sold to Grifols companies in the Biopharma business unit.

Biopharma: The Biopharma business unit includes activities relating to the manufacture of plasma derivatives for therapeutic use, including the reception, analysis, quarantine, classification, fractionation and purification of plasma and the sale and distribution of end products. The main plasma products the company manufactures are IG, Factor VIII, A1PI and albumin. The company also manufactures intramuscular (hyperimmune) immunoglobulins, ATIII, Factor IX and plasma thromboplastin component, or PTC.

Diagnostic: The Diagnostic business unit focuses on researching, developing, manufacturing and marketing in vitro diagnostics products, including analytical instruments, reagents, software and associated products for use in clinical and blood bank laboratories, covering the entire value chain from donation to transfusion. The company concentrates its Diagnostic business in transfusion medicine (immunology and immunohematology) and specialty diagnostics, such as hemostasis. The Diagnostic business unit’s main customers are blood donation centers, clinical analysis laboratories and hospital immunohematology services. The Nucleic Acid Testing, or NAT, Donor Screening Unit is engaged in research, development, manufacturing and commercialization of assays and instruments based on NAT technology for transfusion and transplantation screening. NAT technology makes it possible to detect the presence of infectious agents in blood and plasma donations, contributing to greater transfusion safety.

Bio Supplies: Net revenue from Bio Supplies primarily consists of revenue related to biological products for non-therapeutic use.

Other Activities and Operations: In addition to the company’s four business units, the company has other smaller operations, activities and business lines (‘Others’), which net revenue primarily originating from the provision of manufacturing services to third parties, third party plasma sales and research activities. Others also includes the company’s Healthcare Solutions. It also includes pharmaceutical products manufactured by the company and intended for hospital pharmacies, as well as the marketing of products that complement the company’s own products.

Geographic Markets

The company is a leading plasma derivatives producer globally, ranking in the top three largest producers in the industry in terms of total sales, along with Takeda and CSL Group. The company is the world’s largest producer of A1PI, which is used for the treatment of A1PI deficiency-related emphysema.

The company operates in over 100 countries through distributors and subsidiaries in 30 countries.

The company’s presence and experience in Latin America, in countries, such as Mexico, Colombia, Argentina, Chile and Brazil, where the company has been marketing and selling products for over 20 years, has positioned the company to benefit from this additional growth in both the company’s Biopharma and Diagnostic business units. In the Asia-Pacific region, the company has established a presence through the company’s subsidiaries and representative offices in Malaysia, China, Thailand, Singapore, Australia, Japan, India, Hong Kong, Taiwan, and Indonesia. The company has also opened a Middle Eastern representative office in Dubai and Saudi Arabia.

The company maintains a continuing focus on international expansion and acquisitions and will continue to selectively consider acquisitions that would generate operation synergies.

The Biopharma Business Unit

The Biopharma business unit is responsible for the research and development, production and marketing of plasma derivative products.

From plasma donation to therapeutic application, there are four major steps in the industry value chain process: (i) plasma collection, (ii) transport and logistics, (iii) manufacturing (fractionation and purification) and (iv) marketing and distribution. The company is present at all levels of the value chain, from collection centers to distribution of the final products. This vertical integration enables the company to leverage its position at each stage to control the overall process, to benefit from lower prices and to introduce complementary products, such as those offered through the Diagnostic business unit, to the company’s customers.

Plasma Collection

Plasma is the key raw material used in the production of plasma-derived products. The company has expanded its plasma collection network through a combination of organic growth by opening new plasma collection centers and acquisitions. The company obtains its plasma primarily from the United States and Europe (Germany, Austria, the Czech Republic, and Hungary) through 392 operating plasma collection centers and, to a much lesser extent, through agreements with third parties.

The company’s plasma requirements through 2023 will be met through plasma collected at the company’s plasma collection centers and purchased from third-party suppliers pursuant to various plasma purchase agreements. As the company sources the majority of its plasma internally, the company has been able to ensure the availability of plasma for the company’s manufacturing needs and assure the quality of the plasma throughout the company’s manufacturing process.

The company has implemented mechanisms to ensure that plasma donors meet the guidelines set forth by applicable regulations regarding, among other things, health, age and frequency of donations. Once the plasma donation is completed, as required by applicable United States and European regulations, the company tests every donation for pathogens, such as HIV, hepatitis A, B and C, parvovirus B19 and syphilis. If the company discovers a unit of plasma that cannot be used in the fractionation process, the company notifies the donor and removes all plasma previously donated by such donor from the company’s inventory.

Transport and Logistics

In accordance with European and United States requirements, the company stores its plasma at a temperature of -30 degrees Celsius (-22 degrees Fahrenheit). During transportation, plasma is kept at a temperature at or below -20 degrees Celsius. The company’s frozen plasma is transported by one of two transport companies, which are the same used throughout the industry.

Fractionation and Purification

The company operates three Biopharma manufacturing facilities in the United States and Spain. The company’s plasma derivative products are manufactured at the company’s Clayton, Los Angeles and Parets facilities, which have a combined fractionation capacity of approximately 22 million liters per year. The company’s Clayton facility is one of the world’s largest integrated protein manufacturing sites, including fractionation, purification and aseptic filling and finishing of plasma-derived proteins.

The Clayton, Los Angeles and Parets facilities are equipped and licensed to produce certain plasma derivative products for the United States, European and other markets. For example, the company produces its Flebogamma DIF and Gamunex IVIG products for all of the company’s markets at the Clayton, Los Angeles and Parets facilities.

In addition, on October 1, 2020, the company purchased from GC Pharma and other investors a plasma fractionation facility and two purification facilities located in Montreal, Canada (as well as 11 plasma collection centers located in the U.S). The Canadian facilities are in the process of construction and renovation. When the construction and renovation are complete and the facilities are licensed and approved, the company will become the only commercial manufacturer of plasma products in Canada, with a fractionation capacity of 1.5 million liters annually. The company plans to be ready to manufacture IVIG and albumin in the Canadian facilities to supply the Canadian market starting in 2023.

The company optimizes the utilization of its fractionation capacity by obtaining FDA and EMA licenses, and completing further requirements, that allow the company to purify at any of the company’s other facilities intermediate products that are produced at one of the company’s facilities. The company has obtained the following FDA licenses, among others, to use at the company’s Clayton facility the Fraction II+III made at both the company’s Los Angeles and Parets facilities to make Gamunex; to use at the company’s Los Angeles facility the Fraction II+III made at both the company’s Los Angeles and Clayton facilities to make Gamunex; to use Fraction V obtained at the company’s Los Angeles facility to produce albumin at the company’s Parets facility; to use Fraction V obtained at both the company’s Clayton and Parets facilities to produce Albutein in the company’s Los Angeles facility; to use Fraction IV-1 obtained at the company’s Los Angeles facility to produce Prolastina, an A1PI the company market in Spain, at the company’s Clayton facility; to use Fraction IV-1 obtained at the company’s Los Angeles facility to produce Prolastin-C lyophilized at the company’s Clayton facility; to use Fraction IV-1 obtained at the company’s Clayton facility to produce Prolastin-C liquid at the company’s Parets facility; to use the same method currently in place in the company’s Parets facility to produce Alphanate in the company’s Los Angeles facility; to use paste from the new fractionation facility at Clayton to produce Gamunex and Prolastin; to produce nano-filtered Gamunex and the 40 gram vial presentation; and to use Cryoprecipitate obtained at the company’s Clayton facility to produce Alphanate at the company’s Clayton facility, which is later sent to the company’s Los Angeles facility to be filled.

The company is continuing its efforts to obtain additional FDA licenses of this nature. The flexibility provided through such licenses allows the company to increase production efficiency and to better address changes in demand between the United States, the European Union and other world markets.

Biopharma Products and Services

Collected plasma, whether source or recovered, is fractionated into different component proteins. The company fractionates and purifies a broad range of plasma derivative products that improve patient care. The company’s Biopharma business unit also sells a non-plasma derivative medicinal product, Tavlesse (fostamatinib), in Europe.

Gamunex-C IVIG, a ready-to-use liquid IVIG product, is one of the leading products in the IVIG segment. Gamunex-C IVIG is one of the premium products in its category since its launch due to a comprehensive set of differentiated product characteristics. The company is one of the market leaders in the production and marketing of immunoglobulin, with about 25.6% market share in volume in the United States as of November 2022, according to PPTA.

In July 2019, the FDA approved Xembify, the company’s subcutaneous immunoglobulin product for use to treat primary immunodeficiencies. The company launched Xembify in the United States in the fourth quarter of 2019. From 2019 to 2021, Xembify was also approved in Canada, France, Italy, Sweden and the United Kingdom for use to treat primary and secondary immunodeficiencies. In 2022, Xembify received approvals in Australia, the Czech Republic, Finland, Slovakia and Spain.

HyperRAB is the world’s leading human anti-rabies immunoglobulin indicated for postexposure prophylaxis, along with rabies vaccine, for all persons suspected of exposure to rabies who have not been previously vaccinated with rabies vaccine. HyperRAB, a 300 IU/ml formulation of which is available in the U.S., is the only human rabies immunoglobulin (‘HRIG’) provided as a higher-potency formulation, potentially requiring fewer injections in administration of each dose. The company had an estimated 80% market share in sales of anti-rabies immunoglobulins in the United States as of December 2022.

In addition, the company is the global market leader in the sales of alpha-1-antitrypsin augmentation therapy (‘AAT’). The company’s AAT has 35 licenses in 28 countries worldwide with 19 countries in North America and Europe. The company’s liquid formulation of AAT (Prolastin-C Liquid) is FDA approved as a chronic augmentation and maintenance therapy to treat emphysema related to severe hereditary A1PI deficiency. A worldwide clinical trial is ongoing to meet post-approval regulatory commitments and obtain Prolastin-C regulatory approval in Europe.

Between Koate-DVI, Fanhdi and Alphanate,we had an estimated 20% market share in volume globally in the pdFVIII hemophilia A market in 2021 (excluding Von Willebrand disease use).

Grifols albumin brands are sold globally, with an estimated 19% market share in volume. In addition, the company’s albumin products meet U.S., European and Chinese requirements, making them attractive to biotechnology companies and genetic labs, as well as hospitals and physicians. In 2021 and 2022, the company launched and began to market in the U.S. Albutein 25% and 5% FlexBag, a flexible container designed to add convenience, ease of use, and durability.

Tavlesse is a novel SYK-inhibitor in-licensed from Rigel Pharmaceuticals for commercialization in Europe and additional markets in the Middle East and North Africa. Tavlesse is indicated to treat chronic immune thrombocytopenia in adult patients who are refractory to other treatments. EMA regulatory authorization was obtained in January 2020, and commercial sales have commenced in Czech Republic, Norway, Denmark, The Netherlands, Germany, Spain, Italy, France and the United Kingdom. The company plans to launch in additional countries in Europe and the Middle East. Tavlesse is the first oral therapy commercialized by Grifols Biopharma.

The company also produces antithrombin (e.g., AT, ATIII, pdAT) (Anbinex and Thrombate III), which is used in the prevention and treatment of thromboembolic complications in patients with antithrombin deficiency; AlphaNine, Profilnine and Factor IX Grifols, which are used in the prevention and control of bleeding in patients with hemophilia B.

In addition to the products described above, the company commercializes intramuscular (hyperimmune) immunoglobulins, which are used for the prevention and treatment of tetanus, prevention and treatment of hepatitis B, and Rh factor complications during birth. Niuliva and Igantibe are used after liver transplants to prevent hepatitis B reinfection of the graft.

The company also manufactures Vistaseal/Veraseal, a biological fibrin sealant composed of fibrinogen and human thrombin used in surgical operations to expedite the healing process. It is commercialized in the U.S. and Canada, in some European countries (i.e. Germany, the United Kingdom, Switzerland, Estonia, Latvia, Lithuania, Austria, Ireland, the Netherlands, Norway, Finland, Sweden, Denmark, France, Italy and Spain), as well as in Singapore and Australia by Ethicon US, LLC (a Johnson & Johnson company).

To sell medicinal products, the company must first register the products with the relevant authorities of the jurisdictions where the products are to be marketed and sold. To comply with the regulatory requirements in a given jurisdiction, the company has a core team in Spain and the United States that prepares, files and coordinates the registration process with the technical personnel at the subsidiary assigned to that jurisdiction. The company has 1,072 Biopharma product licenses registered in 89 countries throughout Europe, the United States, Latin America, Asia and the rest of the world. The company’s most significant government-issued licenses for Biopharma products are:

Gamunex/Gamunex-C/Flebogamma DIF. The company has 202 licenses for the marketing and sale of one or more IVIG products;

Xembify. The company has 18 licenses for the marketing and sale of this product;

Prolastin/Prolastin-C/ Prolastin-C Liquid/Prolasplan/Prolastina/Pulmolast/Lynspand. Alpha 1-Proteinase Inhibitor (Human). The company has 35 licenses for the marketing and sale of one or more of these A1PI products;

Fanhdi/Alphanate/Koate- DVI Factor VIII. The company has 233 licenses for the marketing and sale of one or more of these Factor VIII products;

Albutein/Human Albumin Grifols/Plasbumin. The company has 266 licenses for the marketing and sale of one or more of these albumin products in their various concentrations;

VistaSeal/VeraSeal. The company has 23 licenses for the marketing and sale of this product; and

Tavlesse. The company has EMA authorization for Tavlesse in the European Union and national authorization in the United Kingdom. Tavlesse is sold in the Czech Republic, Norway, Denmark, the Netherlands, Germany, Spain, Italy, France, and the United Kingdom.

In addition to the sale of the products described above, the company has entered into a series of arrangements with many Spanish transfusion organizations to fractionate recovered plasma (plasma separated from blood obtained from a blood donation) from such organizations and manufacture plasma derivatives under the company’s own brand name for use by hospitals. The company also provides virus photo-inactivation of transfusion plasma to hospitals and clinics in Spain. The plasma is inactivated at the company’s manufacturing facilities and then sent back to the clinic or hospital at which it was collected, where it is used for transfusions.

The Diagnostic Business Unit

The Diagnostic business unit focuses on researching, developing, manufacturing and marketing in vitro diagnostics products, including analytical instruments, reagents, software and associated products for use in diagnostic clinical and blood bank laboratories. The company has a significant market share in NAT blood screening solutions. In addition, the company has increased its sales of automated immunohematology systems and reagents to hospital transfusion services and blood centers in several key global markets. The company also continues to grow its portfolio of clinical and diagnostic products in select areas, including autoimmunity; and has agreements to extend the number of antigens the company manufactures for use in clinical and blood bank diagnostic tests.

The company assembles the majority of its instrument analyzers at the company’s Parets facility in Spain. The company manufactures antigens at its Emeryville facility in the U.S., oligos and other critical components of the transcription-mediated amplified NAT kits for blood and plasma infectious diseases screening at the company’s San Diego facility in the U.S.

The production, marketing and sale of many of the company’s Diagnostic business unit products are subject to the prior registration of such products with the relevant authorities of the applicable jurisdictions. The company has over 3,420 diagnostic product licenses registered in over 80 countries in Europe, the United States, Canada, Latin America, the Asia-Pacific, the Middle East and Africa.

In addition to the products noted above, the company offers its customers solutions developed in collaboration with, or manufactured by, third-parties that complement the company’s product lines. The Diagnostic business unit distributes products in over 100 countries in Europe, the Americas, the Asia-Pacific, the Middle East and Africa.

The company’s Diagnostic business unit includes a complete line of products and systems to perform blood donor screening molecular tests aimed at detecting the pathogenic agents of transfusion-related infectious diseases, such as HIV (Types 1 & 2), Hepatitis A, Hepatitis B, Hepatitis C, Hepatitis E, parvovirus B19, West Nile Virus, Zika Virus, Dengue Virus, Babesia and Plasmodium. The company controls the research and development, manufacturing and worldwide commercialization of the company’s Procleix blood screening products. The company’s Procleix NAT solutions continue to lead the market, and are used to screen more blood and plasma donations worldwide each year than any other NAT system.

Transfusion Medicine

The company has a leadership position in transfusion medicine, with a broad portfolio of products that range from blood and plasma testing to blood typing. The company focuses primarily on meeting changing market needs with new and enhanced products for the company’s Procleix NAT blood screening portfolio and on expanding sales of the company’s immunohematology products (WADiana, Erytra and Erytra Eflexis analyzers and related DG Gel blood determination cards) in key markets.

The company continues to focus on obtaining FDA and other regulatory approvals to expand the company’s portfolio of NAT products. In January 2019, the company obtained FDA approval for an assay to detect four species of the Babesia parasite (B. Microti, B. Venatorum, B. Divergens and B. Duncani), known to cause babesiosis, a tick borne disease. The assay is designed to be used for routine screening by the U.S. blood banks on the Procleix Panther system, where the company estimates that it is the market leader and continues the company’s efforts to offer solutions to blood banks. The company obtained CE mark for the Babesia assay in early 2021.

In October 2019, the Procleix Panther System featuring Automated Ready Technology, or ART, obtained Europe’s CE mark, making it available in European markets accepting the certification, and reinforcing the company’s leadership in the blood banking industry. With significant hardware and software improvements on the platform, the Procleix Panther System featuring ART will help accelerate laboratory efforts to reach higher levels of workflow automation for blood and plasma screening.

In May 2020, Procleix Panther System, featuring ART, received FDA approval for use with the following U.S. licensed products: Procleix Ultrio Elite Assay, Procleix WNV Assay, Procleix Zika Virus Assay and the Procleix Babesia Assay.

Also in May 2020, the company obtained CE Mark for the Procleix SARS-CoV-2 assay to screen blood or plasma for SARS-CoV-2 and plasma from convalescent donors who have recovered from COVID-19 or infection with SARS-CoV-2, for further manufacture. The company also received CE Mark for a respiratory claim as an aid in the diagnosis of COVID-19 in specific respiratory specimens that are transported in Specimen Extraction Buffers, which obtained a separate CE Mark. The SARS-CoV-2 respiratory claim is limited to Spain, Northern Ireland and other select E.U. countries on a contractual basis with Hologic. The agreement for this assay with Hologic expired in December 2021 and will not be renewed. In August 2020, the company obtained the approval of the Zika assay in Canada.

Also in August 2020, the company successfully commercialized the Procleix UltrioPlex E assay, a new multiplex assay for use on the Procleix Panther system, in Japan. The assay, which is a Transcription Mediated Amplification (‘TMA’) qualitative in vitro NAT, was designed to detect five viruses in human blood specimens: HIV-1, HIV-2, HCV, HBV, and HEV in a single, simultaneous test, improving overall laboratory efficiencies. Early in 2021, the Procleix UltrioPlex E assay received CE mark. This assay enhances blood safety and represents a significant advance in streamlining a laboratory’s NAT testing operations by allowing for an increased screening of viruses from a single-donor specimen without the need for any additional equipment. The Procleix UltrioPlex E assay also helps produce less waste with higher results throughput and greater walk-away time for laboratory staff when compared with running screening solutions separately.

In 2022, the company had several developments in transfusion medicines, including the following:

The company obtained CE approval for an assay to detect ribonucleic acid (‘RNA’) from Plasmodium species (P. falciparum, P. knowlesi, P. malariae, P. ovale, and P. vivax) in whole blood specimens that causes Malaria disease. The assay is designed to be used for routine screening by blood banks on the Procleix Panther system, where the company estimates that it is the market leader and continue the company’s efforts to offer innovative solutions to blood banks.

The company received FDA 510(k) clearance for Procleix Quality Controls (‘PQCs’) intended for use as an external assayed quality control material to monitor the performance of sevarla assays performed on the Procleix Panther system, such as the Procleix Ultrio Elite Assay, Hepatitis B Virus DNA, Hepatitis C Virus RNA, HIV-1 RNA, Procleix West Nile Virus Assay and Procleix Babesia Assay.

The company obtained CE approval for immunohematological products Sero-Cyte Pool Dia 0.8% and Grifols sCD38. Sero-Cyte Pool Dia 0.8% is designed to be used by blood banks on DG Gel systems for routine testing for the screening of irregular antibodies, including the antigen Dia, in donors. This reagent complements the existing reagent red blood cells and allows the company to reinforce the company’s presence in markets, such as Brazil, where the identification of the antigen Dia is required by local regulations. The new product Grifols sCD38 is an innovative product designed to be used in patients being treated with Darzalex (a drug for multiple myeloma treatment). Grifols sCD38 is a protein reagent used for the pre-treatment of the plasma of patients receiving Darzalex therapy, and is meant to counteract Darzalex-mediated pan-reactivity without significantly diluting the patients’ plasma. This enables subsequent screening and identification of irregular antibodies in DG Gel system and tube techniques, and crossmatch in DG Gel system. The market is experiencing a lack of availability of this kind of reagent, which leads the company to believe that Grifols sCD38 will be well received by blood bank customers.

The company received FDA 510(k) clearance for Blood Typing Manager, a product designed to aid in the interfacing and managing of data among immunohematology instruments, blood establishment computer software and laboratory information systems as part of the DG Gel System.

The company received BLA approval for a DG Gel 8 Direct Coombs card used for the evaluation of the direct antiglobulin test of two different human blood samples. This card makes it possible to differentiate red blood cells sensitized in vivo by IgG type immunoglobulins or the complement C3d fractions. The card is intended to be used with the DG Gel System.

The company obtained CE approval for a DG Gel DC Scan Plus card, also intended to be used in gel technique for the evaluation of the direct antiglobulin test. This test permits the differentiation of red blood cells sensitized in vivo by IgG, IgA and IgM type immunoglobulins and/or with the complement C3b, C3d and C4b fractions in human blood samples. The DG Gel DC Scan Plus card is intended for the investigation of clinical situations where the presence of hemolysis has been established, or is suspected, to distinguish immune from nonimmune hemolytic anemia. The card can be used manually or with automated instruments of the DG Gel System.

As part of the company’s strategy of geographic expansion and as a leader in this market segment, the company continues to consider requests to include NAT screening for blood and plasma donations in countries as they develop their health systems. In 2020 and 2021, the company entered several new countries, such as Guatemala and Czech Republic.

The company continues to experience strong sales of the company’s DG Gel system blood typing products. In December 2018, Erytra Eflexis, a fully automated, mid-size analyzer that performs pretransfusion compatibility testing using DG Gel technology already in use in the E.U., was approved by the FDA. It has a smart and compact design, offering intuitive operation that has expanded the company’s product portfolio, which already includes the WADiana and Erytra analyzers and DG Gel cards. The DG Gel family of products continued to expand in 2019, with the commercialization in CE mark countries of DG Reader NET, a single card processing platform operating with the same consumables and reagents as the company’s fully automated systems. The DG Reader NET received FDA approval at the end of 2019. Also, in November 2019 the company received FDA approval for two new red blood cell panels, Data-CytePlus 2 and Data-CyteExtend. Additionally, a Weak D assay, to be used in combination with the DG Gel system in automation, received FDA approval at the end of 2019. This is a valuable test for donor centers and Grifols Laboratory Solutions and will support the company’s expansion in the region. More recent FDA approvals include the new DG Gel 8 ABO/Rh (2D) card, which helps customers to identify the majority of DVI variant patients as part of the ABO/Rh type, and, as mentioned previously, the DG Gel 8 Direct Coombs card.

In the U.S., the company’s blood typing solutions have experienced solid growth. The company has expanded commercialization efforts and will continue to promote this area in light of its high growth potential. Recently, the company launched in CE mark countries and Australia the new middleware for the company’s immunohematology instruments, the company’s Blood Typing Manager (‘BTM’). This middleware complements the company’s blood typing systems portfolio and increases the company’s competitiveness by adding new advanced features that support increasing the company’s customer base.

Through the company’s U.S. subsidiaries Biomat USA and Interstate Blood Bank Inc., the company has entered into an agreement with Creative Testing Solutions (‘CTS’), a nonprofit blood donor testing laboratory organization in the United States. Pursuant to this agreement, as of April 1, 2022, CTS began to operate for a period of ten years (renewable for up to another ten years) the company’s three testing laboratories located in Memphis, Tennessee and San Marcos and Austin, Texas, to perform donor screening for blood and plasma collections. Grifols Laboratory Solutions will continue to provide specialty testing, including in-process and final product testing, as well as diagnostic solutions for clinical issues related to Molecular and Serological Immunohematology. The facility in Austin, Texas, provides testing, consultation and integrated solutions to optimize patient care for specialists in Hematology, Oncology, Perinatology, Obstetrics, Pharmacy, Transplantation and Transfusion Medicine.

In several countries, the company distributes BLOODchip blood group genotyping tests manufactured by Progenika, a Grifols company. This product line includes ID CORE XT, which determines 37 antigens of red blood cell groups, ID RHD XT, a molecular diagnostic kit that detects the most relevant RhD variations, and ID HPAXT kit to determine 12 Human Platelet Antigen (‘HPA’) systems. BIDSXT is the software tool that allows the analysis, interpretation and database management to transmit the results to the Laboratory information system (‘LIS’).

In November 2021, consistent with the company’s long-term growth strategy, which focuses on promoting viable and essential business lines, the company decided to exit the blood collection bags business. As a result, the company is shutting down production of blood collection bags at the company’s plants in Murcia, Spain, and Campo Largo, Brazil.

The company operates a product line of high quality antigens, which are critical components of clinical diagnostic and blood screening immunoassay tests sold worldwide, which are produced through a joint business with Ortho Clinical Diagnostic. As part of this joint business, the company has a contract with Abbott Laboratories for the supply of high quality antigens used in the manufacture of immunoassay diagnostics. This contract, with a total value of approximately $700 million, extended the supply of antigens until 2026, ensuring higher levels of recurring income in this area. The company also extended its agreement with OraSure Technologies through 2022, reinforcing the company’s position as a flexible provider of antigens.

Working together with Ortho Clinical Diagnostics, the company maintains the VITROS HIV Combo test for the early detection of HIV infection. This is an important milestone in the joint business between the two companies, in which Grifols is responsible for manufacturing the antigens for the test. The test received approval from the FDA in October 2018 to be used on Ortho’s VITROS ECi/EciQ. The test was previously approved for use on Ortho’s VITROS 5600 Integrated System and Ortho’s VITROS 3600 Immunodiagnostic System.

Clinical and Specialty Diagnostics

Operating within the company’s Clinical and Specialty Diagnostics, Progenika manufactures a genetic diagnosis test for Familial Hypercholesterolemia (‘FH’) using next generation sequencing technology (‘NGS’). The Diagnostic business unit continues its efforts to broaden the Promonitor line, used to monitor biologic drugs as sales continue in Chile, select European Union countries, Australia and in the U.S. The Promonitor product line includes an ELISA (enzyme-linked immunoabsorbent assay) device line also developed by Progenika to monitor patients being treated with biological medicines for rheumatoid arthritis and other chronic inflammatory diseases. The company maintains CE marking of two additional tests in the Promonitor family that enable treatment with the biological product golimumab, and several tests to permit the use of a single dilution to measure quantity of drug and antibodies for a number of biological drugs, commonly used in the treatment of various inflammatory diseases, such as rheumatoid arthritis and ulcerative colitis. In 2021, the company entered into a co-development agreement with DIESSE Diagnostica Senese to adapt Promonitor ELISA kits to DIESSE’s Chorus analyzer. This adaptation to monotest and ready-to-use devices addresses customer and market needs for improved automation. The development of Promonitor tests on the Chorus automated system facilitates an improved testing workflow, resulting in earlier feedback for the clinician.

As a result of the development of Promonitor, the company has discontinued production of the company’s Triturus analyzer, but continue to service it for the company’s existing customer base.

Pursuant to an exclusive agreement with AESKU Diagnostics GmbH & Co. (‘AESKU’), the company distributes autoimmunity diagnostic products in Chile, Portugal, Spain and Mexico. The company also serves key U.S. customer segments with AESKU products. One of these diagnostic products is Helios, the only fully automated platform capable of performing all immunofluorescence pipetting and reading steps in the United States, which strengthened the company’s U.S. portfolio of products.

The company retains the first FDA approved biological molecular test that uses the DNA of the patient for the diagnostic. This genetic test to detect alpha-1 antitrypsin deficiency (the ‘A1AT Genotyping Test’) can be conducted on DNA extracted from blood, as well as a drop of blood collected on paper (a ‘Dry Blood Spot’). This test was developed by Progenika Biopharma, a Grifols subsidiary. In 2022, A1AT Genotyping Test was also CE marked. Although highly complex, the test has been designed so any molecular biology laboratory can process it with minimal human intervention. At the end of 2019, the company also introduced AlphaID, a new simple cheek swab that greatly simplifies the sample collection process. AlphaID allow physicians and healthcare providers to obtain a sufficient oral sample for alpha-1 screening, and it is completely free from ordering to results. The test is now available for distribution in the U.S.

Since the approval of AlphaID in 2019, Progenika Biopharma has been developing a service to offer, directly to homes, a diagnostic solution to potential patients of alpha-1 antitrypsin deficiency. The service has been cleared by the FDA in 2022 as ‘AlphaID At Home Genetic Health Risk Service.’ This is a complex multidisciplinary project that brings together six international companies lead by Progenika Biopharma, being the second over-the-counter clinical diagnostic service approved by FDA.

The Bio Supplies Business Unit

The Bio Supplies Business Unit provides human biological materials for life sciences research and the development and manufacturing of pharmaceutical and diagnostic products. Most materials and products come from the company’s collection centers with vertical integration manufacturing processes (in-house production).

Products in the company’s Bio Supplies business unit cover a broad spectrum of applications where the need for human-based biological material cannot be replaced by other types of products, such as:

Cell Therapy: providing human-based cell culture supplements, plasma proteins, and leukocyte apheresis (white blood cell concentrate obtained through apheresis and used in the development of new cell therapies).

Pharma Manufacturing: human-based plasma proteins to be used as excipients (i.e. inactive substances that serve as vehicles or mediums for a drug or other active substances in the manufacturing of therapeutic drugs). Human plasma and intermediates used to manufacture plasma derived medicines.

Diagnostic Manufacturing: human blood cells, proteins and plasma and serum for the manufacturing of quality controls and calibrators used in in vitro diagnostics tests.

Life Science Research: Human blood derived products and biospecimens used in life science basic research or by in vitro diagnostic companies to develop and validate their analytical assays.

Other Activities and Operations (‘Others’)

In addition to the company’s four business units, ‘Others’ represents operation and activities, including the provision of manufacturing services to third parties and third-party plasma sales, pharmaceutical products manufactured by the Grifols Group intended for hospital pharmacies.

The Healthcare Solutions business line provides services and manufactures products used by hospitals, blood banks, plasma collection centers and other healthcare systems. These products include parenteral solutions, robotics and software. It also includes products that the company does not manufacture but that the company markets as supplementary to the products that the company do manufacture.

Research and Development

The company’s research and development spending was €361.1 million in 2022.

Raw Materials

On April 25, 2022, the company acquired all of the existing equity interest in Biotest Holdings from Tiancheng International Investment Limited (‘TIIL’) and accepted an assignment of certain shareholder loans granted by TIIL to Biotest Holdings. Biotest Holdings in turn owns 89.88% of the ordinary shares and 1.08% of the preferred equity shares of Biotest AG, a global company that supplies plasma protein products and biotherapeutic drugs, which will give the company accesses to 28 additional plasma collection centers.

On July 29, 2021, the company signed a joint venture agreement with ImmunoTek GH, LLC (‘ImmunoTek’) to develop 21 plasma donation centers in the United States, five of which are already operational.

Marketing and Distribution

The company sells Biopharma, Diagnostic and Healthcare Solutions products to hospitals and clinics, GPOs, governments and other distributors in over 100 countries.

In the United States, the sales model is complex, with many intermediaries, requiring Grifols to execute multi-faceted arrangements for the distribution of the company’s products. Sales of finished goods are distributed through various channels such as distributors, wholesalers, specialty pharmacies, home health care companies, clinics, hospitals, government entities and directly to physician offices.

The company markets its products to healthcare providers and other decision-makers, such as those in hospitals, through focused sales presentations. The company promotes its products directly to the GPO’s members. For safety and post-sale service reasons, the distributor is required to provide the company with the specifics of the ultimate delivery to the client.

The company has developed long-standing relationships with major hospitals in most of the company’s European markets, and hospitals are loyal customers that recognize the high quality and safety of the company’s products, its reliability as a supplier and the strong product expertise and service provided by the company’s sales representatives. Due to the nature of the company’s customer base and the prevalence of repeat sales in the industry, the company markets its products through focused sales presentations rather than by advertising campaigns.

Sales to Eastern Europe, the Middle East and some Asian countries are made mostly by third parties outside of the company’s sales network. The company’s sales in Latin America are made mainly by the company’s sales network.

Sales Representatives

The company requires its sales representatives to be able to highlight the technical differences between the company’s products and those of the company’s competitors. Sales representatives call on office-based healthcare providers and hospital-based healthcare providers, departmental heads, purchasing agents, senior hospital directors, lab directors and pharmacy managers. The company divides its sales efforts along the lines of the company’s main product categories. The company’s sales personnel are primarily located in Europe and the United States, but the company also has sales personnel in Latin America and the Asia-Pacific.

In the company’s Biopharma business unit, the company utilizes mixed sales units comprised both marketing and sales personnel. In some countries, the company has product line-specific sales units for immunology and neurology, pulmonary, intensive care and coagulation factors.

Distribution

The company’s distribution network personnel are located in Europe, Latin America, the United States and the Asia-Pacific; and handle the distribution of the company’s biological medicine, diagnostic and other medical products, as well as goods manufactured by other premier healthcare companies that complement the company’s own products.

During 2021, the company distributed the majority of its products through the company’s own distribution network. In some cases, particularly in the field of Diagnostics, the company distributes products through marketing partners and third-party distributors. The company has a direct presence in 30 countries and the company carefully selects distributors in the countries where the company does not have a direct presence. The company has a responsive, effective logistics organization that is able to punctually meet the needs of hospital centers and other customers throughout the world.

The company’s sales, marketing and distribution network included 1,636 employees as of December 31, 2022, which included 1,469 sales and distribution personnel and 167 marketing employees.

Patents and Trademarks

As of December 31, 2022, the company owned 3,487 patents and patent applications in various countries throughout the world, of which 970 are in the final application process. In some countries, these patents grant a 20-year protection period. 1,435 of these patents are set to expire in the next ten years, including the patent for the Biotest intravenously administered polyclonal immunoglobulin preparation, containing IgM and method of manufacturing (CA1341505C), which expires in May 2023, the patent for the Grifols Sterile Filling system, which expires in January 2024, and the patent for the process of removing viruses in Fibrinogen solutions, which expires in March 2024.

As of December 31, 2022, the company also owned 4,167 trademarks in various countries throughout the world, of which 156 are in the final application process. In addition, the company co-owns certain patents and patent applications with third parties, including patent rights co-owned with Novartis following the Novartis Acquisition.

Plasma Derivative Products

As of December 31, 2022, the company owned 980 patents and patent applications related to plasma derivatives, including 396 in Europe, 112 in the United States and Canada, 470 in the rest of the world and two international patent applications under the Patent Cooperation Treaty, an international treaty allowing patent protection in many countries by filing a single international application. The most important of these patents relate to a concentrated subcutaneous alpha-1 antitrypsin; the use of low volume plasma exchange for the treatment of Alzheimer’s disease; transferrin for neurodegenerative applications; transferrin for the treatment of Hipoxia inducible factor related conditions; plasmin in wound healing; the process for removing viruses in Fibrinogen solutions; a concentrated subcutaneous Immunoglobulin G injection; concentrated Immunoglobulin M preparations for the treatment of bacterial infections; and anti-thrombin to treat blunt trauma.

Diagnostic Products and Healthcare Solutions

As of December 31, 2022, the company owned 190 patents and patent applications related to the company’s Diagnostic products and Healthcare Solutions business line, including 141 in Europe, 32 in the United States and Canada and 17 in the rest of the world. The most important of these patents relate to the: BlisPack, a blister handling machine; Erytra Eflexys, a mid-sized instrument to perform pre-transfusion compatibility tests using DG Gel technology; innovative containers for human plasma proteins; novel HIV antigens for blood screening; novel GpIba for homeostasis; soluble recombinant form of CD38 receptor; screening assays for bloodborne parasites; and recombinant antigens for detection of COVID-19.

As of December 31, 2022, the company owned 93 patents and patent applications related to other areas of the business, including 32 in Europe, 26 in the United States and Canada and 35 in the rest of the world.

Licenses from Third Parties

The company licenses certain intellectual property rights from third parties, including Singulex and Hologic. Singulex granted the company an exclusive worldwide license under certain intellectual property rights for the use and sale of certain products and services for blood donor and plasma screening. Pursuant to an intellectual property license with Hologic, the company obtained a fully paid-up license to certain of Hologic’s intellectual property for use in the NAT Donor Screening Unit.

History

The company was founded in 1940. It was incorporated in Spain as a limited liability company in 1987 under the name Grupo Grifols, S.A. The company was changed its name to Grifols, S.A. in 2005.