Thermo Fisher: ‘Bio market is good but our position is better’

Thermo Fisher has reported another quarter of double-digit in its life sciences division attributing its competitive strength to its diversified offering.

For the third quarter 2019, Thermo Fisher reported sales of $6.3 billion (€5.7 billion), up 6% year-on-year. Within the firm’s Life Sciences Solutions Segment division, which includes bioprocess equipment and its biomanufacturing business, revenues grew 13% to $1.7 billion.

Last quarter, analysts claimed the “bioprocessing ecosystem [was] on fire,” and another period of double-digit growth, for Thermo Fisher at least, indicate there is no real slow-down.

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“The markets are good, but our competitive position is truly unique, and we are clearly growing faster than the industry and gaining market share,” said Thermo Fisher CEO Marc Casper on an investor call.

“And that is because our customers understand that we really do have a unique value proposition that helps them to accelerate their innovation and at the same point help them drive their productivity and all of our businesses did well, serving that customer set.”

Diversified protection

Unlike some of its peers, Thermo Fisher is protected from any slight downturns in any one area of life sciences due to its diversified offering.

The company is one of a handful of vendors within what is essentially a bioprocess oligopoly – the others being Sartorius, MilliporeSigma, Danaher and, until its imminent takeover by Danaher, GE Healthcare – while also being a major player in the biologics contract development and manufacturing organization (CDMO) space through its 2017 $7.2 billion acquisition of Patheon.

“In terms of how we see the market, we have all the companies so we have the best insight, because we have our bioproduction business, which gives you one lines,” Casper told stakeholders. “We obviously have a biologic CDMO which gives you other lines, and then we have these very deep relationships across the biotech and pharmaceutical industry. And what we are seeing is a very robust pipeline of activity.”

The firm has also has one foot in burgeoning gene therapy CDMO space through its $1.7 billion acquisition of Brammer Bio earlier this year, another area where Casper predicts Thermo Fisher will be in a competitive position.

“In terms of cell and gene therapy, these are young industry, and you are going to see individual Company volatility, but the promise around cell therapy and gene therapy continues to be very strong and we are very excited about our competitive position, both in our pharma services business as well as our product businesses serving that market.”

EvercoreISI analyst Vijay Kumar described Thermo Fisher’s revenues as “just what that the ‘doc’ ordered to calm the 3Q jitters.”

He wrote in a note: “While it is possible that macro may pose incremental headwinds heading into 2020 (our macro model still shows deceleration), the sequential acceleration in Bioproduction / Bioprocessing should provide ample comfort to Bulls that growth thesis remains intact. Moreover, Thermo has been gaining share in a number of key end markets which should provide additional comfort – we cite the +20% growth in Bioprocessing and HSD growth in its service business as proof points.”

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