US dollar prompts ThermoFisher to predict flat revs in 2015 and move reagents to Lithuania

By Gareth Macdonald

- Last updated on GMT

Strong dollar a problem for ThermoFisher and drugmakers like Pfizer, Bristol Myers-Squibb
Strong dollar a problem for ThermoFisher and drugmakers like Pfizer, Bristol Myers-Squibb
ThermoFisher has forecast flat sales and earnings in 2015, warning that weaker currencies in key markets will offset higher biopharma spending.

The US life sciences supplier issued a 2015 revenue forecast of between $16.8bn and $17bn, which is short of the $17.25bn predicted by analysts. CEO Marc Casper said the guidance included a “4.5% headwind from foreign currency​.”

For the uninitiated, a 'currency headwind'​ is when revenue generated in one currency loses value when converted into a stronger currency.

The firm is not the only multinational to have warned about currencies. Pfizer​ and Bristol Myers-Squibb​, for example, have both said that the strong dollar weighed on revenues in financial results published this week.

ThermoFisher does not discuss regional sales in its Q4 US SEC filing​, however, the comments about the yen and euro suggest the firm expects to generate significant revenue in Japan and Europe in 2015.

Pharma spending drives Q4 growth

In the final three months of 2014, the strong US dollar reduced revenue by 3%. However, the negative impact was more than offset by organic growth and that provided by acquisitions. Revenue for the quarter was 30% higher at $4.49bn.

Within this, life sciences revenue was $1.19bn, up $192m from Q4 2013, with the contribution from Life Technologies and sales of bioproduction, qPCR, cell biology and sequencing systems driving growth.

ThermoFisher said the business benefitted from government contracts and “year-end spending by our pharma and biotech customers​,” also citing these as drivers for gains made by its laboratory products arm.

CEO Casper did not name any of the customers involved during ThermoFisher’s conference call, but did say the firm had had a strong year in pharma and biotech thanks in part to Life Technologies' clients.

He also said that while a hike in US Government funding for research has been a subject of discussion in 2014 – most recently during President Obama’s State of the Union​ – opportunities have not materialised as yet.

Manufacturing moves

Currencies also factored into how ThermoFisher plans to rejig its manufacturing operations.

Casper told analysts that ThermoFisher plans to relocate some of its production operations outside the US to countries where production is cheaper, citing Lithuania as an example.

We're moving more of our production of reagents to our Lithuanian site which is both low-cost and obviously we'll benefit from the exchange rates."

He added that: “Over time, we'll increase sort of the natural hedge in our business by increasing our manufacturing footprint in Europe by selecting our lowest cost facility to do tha​t.”

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