CSL: Moat Intact Despite Reassessment of Grifols

We maintain our narrow moat rating for CSL after reassessing the moatworthiness of peer Grifols. Grifols is one of three companies dominating the USD 30 billion plasma-derived therapy market, along with CSL and no-moat Takeda. Grifols has long been admired for its engineering expertise, but poorly run and sprawling collection centers have weighed on returns. The company is rebounding from pandemic pressures, but we think its long-term competitive advantages in the plasma industry, which drives more than 80% of Grifols’ revenue, are weakening. Despite cost-control efforts, we see significant pressure on Grifols’ ability to improve returns, and we’ve lowered our moat rating to no-moat from narrow.