Thermo Fisher Scientific preps the laboratory for research,
analysis, discovery, or diagnostics. The company makes and
distributes analytical instruments, scientific equipment, and other
laboratory supplies. Products range from chromatographs and
spectrometers to Erlenmeyer flasks and fume hoods to
gene-sequencers. Increasingly, it offers testing and manufacturing
of drugs, including biologicals. Thermo Fisher also provides
specialty diagnostic testing products, as well as clinical
analytical tools. The company tallies more than 400,000 customers
worldwide. Its key markets are pharmaceutical and biotech,
diagnostics and health care, academic and government, and
industrial and applied research.
Thermo Fisher's Laboratory Product and Services unit, which
provides just about everything needed to run a lab, generates more
than 35% of its sales. Life Sciences Solutions, which accounts for
about a quarter of revenue, provides reagents, instruments, and
consumables used in biological and medical research, and drug
discovery and production. Analytical Instruments, which supplies
instruments, consumables, software, and services, and Specialty
Diagnostics, which offers diagnostic test kits, reagents, culture
media, instruments, each account for less than 20% of revenue.
Half of Thermo Fisher's revenue comes from its US customers.
China is the second biggest single-country market, accounting for
10% of revenue. Other key countries for Thermo Fisher are Japan,
the UK, and Germany.
The company operates manufacturing, research and development,
administrative, and logistics facilities in about 50 countries
outside the US.
Sales and Marketing
Thermo Fisher's sales channels include direct sales, electronic
commerce, distributors, and catalogs. Its sales staff numbers about
11,000. The company also offers supply chain management services to
Thermo Fisher's revenue has risen for seven straight years and
profit has increased for five years in a row.
Sales rose 8% to about $18.3 billion in 2016 from just under $17
billion in 2015. Contributions from acquired companies accounted
for more than half of the increase. Organic revenue rose from
increased demand from pharmaceutical and biotech customers. The
Life Sciences Solutions business posted the company's strongest
growth in 2015, rising 12% (up about $540 million). Most of the
unit's growth came from increased demand for biosciences products
and bioprocess products as well as next-generation sequencing
tools. Sales in Asia, paced by an increase of about 25% in China,
led the company's geographic regions. The strength of the US dollar
in relation to other currencies lopped off about $145 million from
revenue in 2016.
Thermo Fisher's net income inched up 2% to about $2 billion in
2016. The company had higher costs related to acquisitions and
restructuring than it did in 2015. Those costs included about $164
million to eliminate redundancies resulting from acquisitions that
included severance pay and costs associated with closing
Cash flow from operating activities was about $3.2 billion for
2016, up from $2.8 billion in 2015. The increase was from lower
investments in working capital and higher income before
amortization and depreciation.
Thermo Fisher has been an deal-making machine, spending more
than $12 billion on acquisitions in 2016 and 2017. The company has
expanded beyond supplying research labs with standard items like
graduated cylinders and Bunsen burners to much more sophisticated
equipment such as gene-sequencing and gene-editing tools. It also
has added drug testing, including running clinical trials, and drug
manufacturing to its portfolio. Thermo Fisher has become something
of a one-stop shop for pharmaceutical companies that concentrate on
developing drugs but outsource their production.
Besides the 2017 proposed acquisition of Patheon NV, Thermo
Fisher bought Affymetrix and FEI, both in 2016, in multi-billion
deals. The company also had made several smaller deals.
Thermo Fisher hasn't let its M&A department carry the entire
load for stocking the product pipeline. The company has kept its
research and development cycle going, investing more than $750
million in 2016, up from about $690 million in 2015.
The company in 2016 offered new versions of products like its
flagship Orbitrap platform, which helps customers in drug discovery
and food safety, forensics, and environmental testing. It released
the Scientific Integrion HPIC system for ion chromatography as well
as the latest generation of its Ion Torrent sequencing instruments.
Two of the company's CRISPR genome editing tools were recognized as
Top 10 innovative products for 2016.
Besides tools to conduct research, Thermo Fisher offers its
cloud computing platform for storing results. The platform supports
the company's gene sequencing and proteomics systems.
Thermo Fisher has its sights set on expanding international
sales, particularly in China. Sales in China grew more than 25% in
2016 to account for 10% of the company's revenue. Overall, about
20% of the company's 2016 revenue came from emerging markets, which
included stronger sales in India and South Korea. Thermo Fisher has
built customer momentum in Asia with new facilities. It opened a
BioPharma Services facility in South Korea to help meet increasing
demand for clinical trials and a bioproduction development lab at
its China Innovation Center in Shanghai.
Mergers and Acquisitions
In 2017 Thermo Fisher offered about $7.2 billion to acquire
Patheon NV, which offers a range of services from regulatory
consulting to making drug ingredients and finished medicines
including biological therapies. Patheon had about $1.9 billion in
revenue in 2016. The deal is expected to close in 2017.
In two major deals in 2016 Thermo Fisher bought FEI and
Affymetrix. FEI, acquired for $4.2 billion, added a complementary
product mix of electron microscopes to Thermo Fisher's mass
spectrometry products. The $1.3 billion deal for Affymetrix brought
instruments used to analyze specimens at the cellular and genetic
levels to the Thermo Fisher portfolio.
Other 2017 deals included Finesse Solutions Inc., a developer of
scalable control automation systems and software for bioproduction,
and Core Informatics, a provider of a cloud-based platform for
scientific data management.
While it was transacted in 2014, the purchase of Life
Technologies for more than $15 billion was major for Thermo Fisher.
The deal moved the company to the head of the pack in life sciences
tools, particularly the growing field of genetic testing.