Whether for research, analysis, discovery, or diagnostics, Thermo Fisher Scientific gets the laboratory ready to assist mankind. The company makes and distributes analytical instruments, equipment, and other laboratory supplies -- from chromatographs and spectrometers to Erlenmeyer flasks and fume hoods. It also provides specialty diagnostic testing products, as well as clinical analytical tools. Thermo Fisher serves hundreds of thousands of customers worldwide in its key markets of health care and diagnostics, biotech and pharmaceutical, academic and government, and industrial and applied settings, including environmental quality and process control.
Thermo Fisher gets about half of its sales in the US. With no country outside the US representing a double-digit percentage of sales, Thermo Fisher sees lots of room to grow internationally, and is aiming for a quarter of sales to come from emerging markets by 2016. Key countries include China (currently 6% of sales), India, South Korea, Brazil, and Russia. Supporting its global expansion efforts, in 2012 it opened a demonstration lab and training center in Seoul, as well as a manufacturing facility in China.
Created through the merger between Thermo Electron and Fisher Scientific in 2006, Thermo Fisher's forming businesses still retain their distinct brands in the marketplace. Thermo Scientific is the company's technology brand with an emphasis on analytical instruments and laboratory workflows, while Fisher Scientific concentrates on the scientific, health care, safety, and education clients. More recently launched, its Unity Lab Services provides vendor-agnostic equipment support and services.
Sales are divided into three segments. Its largest, bringing in about 45% of sales, is laboratory products and services. The analytical technologies businesses accounts for about 30% of sales, while the specialty diagnostics segment earns nearly a quarter of sales.
In 2014 the company reorganized its product segments into four to add Life Sciences (formerly both the Life Technologies and Biosciences businesses).
Sales and Marketing
Pitching Thermo Fisher's offerings is a team of direct sales personnel. The company also uses e-commerce, third-party distributors, and other channels.
Thermo Fisher reported a 7% rise in revenues in 2012 to some $12.5 billion. Growth was primarily attributed to acquisitions made in 2011 and 2012, as well as from higher sales at existing businesses, including emerging market operations. Thermo Fisher's revenues have increased each year since the company's formation in 2006, with the exception of a slight dip in 2009.
Net income fell in 2012 by 11% to some $1.2 billion, following two years of profit growth. Declining income in 2012 was attributed to higher research and development expenses, other expenses, and restructuring costs.
While acquisitions continue to be a strong component in Thermo Fisher's growth strategy, the company also uses divestitures to keep its business focused. In early 2014 it agreed to sell its cell culture, gene modulation, and magnetic beads businesses to GE Healthcare for $1 billion. In 2011 it sold its Athena Diagnostics business to Quest Diagnostics for $740 million. At the same time, the company sold its Lancaster Laboratories contract testing unit to Eurofins Scientific for $200 million. Divestitures continued in 2011 with the sale of its laboratory workstations business (formerly part of the laboratory products and services segment).
Thermo Fisher is working to reduce expenses through other restructuring measures including workforce reductions and facility consolidations.
Mergers and Acquisitions
In early 2014 Thermo Fisher finalized a huge deal that will move it to the head of the pack in life sciences tools, particularly the growing field of genetic testing. It bought California-based Life Technologies for about $13.6 billion, plus the assumption of debt. Life Technologies develops tools and systems for gene cloning, expression, and analysis.
The cash from making bread-and-butter laboratory equipment (beakers, microscope slides) is used to buy small, innovative companies that can benefit from Thermo Fisher's resources and drive the company's steady growth, especially in emerging markets.
In 2012 the company moved to boost its specialty diagnostics segment by acquiring transplant diagnostics provider One Lambda for $925 million. The purchase not only filled out Thermo Fisher's portfolio, but the largely US-focus of One Lambda's products can be expanded through Thermo Fisher's emerging markets presence.
Also in 2012 Thermo Fisher purchased Doe & Ingalls Management for some $175 million. The purchase expanded the company's offerings of specialty production chemicals and supply services to life science and microelectronics customers.