Thermo Fisher: New plants show there's more to growth than just M&A
For its life sciences solutions segment, second quarter revenues were $1.13bn (€1.02bn), an increase of 2.3% on the same period 2014. Operating income in the sector increased 8% and adjusted operating margin was 28.6%, up 150 basis points.
Within this, management said it “continued to see outstanding growth” in its bioproduction and biosciences businesses, and CEO Marc Casper described how new facilities in the UK and Dubai announced in the quarter were part of the firm’s growth strategy:
“We added new state-of-the-art capabilities at our bioproduction facility in the UK for the manufacture of our proprietary dry powder media,” Casper said in a call, referring to a £14m ($22m) investment at the firm’s campus in Inchinnan, Scotland, announced last month in response to demand for the product.
“This unique granulated formula has all the benefits of traditional liquid media without the associated storage and transportation costs. This format simplifies cell culture production and is used in a range of drugs including an increasing number of cancer therapeutics.”
The news comes less than two years after Thermo Fisher opened its first dry powder media plant in Singapore.
But Casper also told stakeholders the firm had expanded in the Middle East, opening a customer experience centre in Dubai. “This facility showcases a wide range of our technologies, from centrifugation to mass spectrometry and genetic sequencing,” he said, adding the site also provides local training.
“The Middle Eastern countries represent a good long-term opportunity for us,” he continued. “Our strategy here is to increase our direct commercial presence starting with demo and application labs like the one in Dubai. We use this as foundation for building strategic partnerships, and I'm encouraged by the progress we've made so far.”
Acquisitions also form part of the company’s growth strategy, and within the quarter Thermo Fisher added research chemicals firm Alfa Aesar and bioprocessing equipment maker ASI as bolt-ons. While there was some speculation the firm lost out to Danaher on acquiring Pall Corporation, management spoke of how the bioproduction industry is still ripe for consolidation.
“It's a $100 billion industry,” said CFO Peter Wilver “We're the market leader, but we obviously have less than 20% share in aggregate… even when you take the largest few players, it's still a very fragmented industry.
“We have a good pipeline of bolt-on transactions - we've done two that we feel good about it and we evaluate others, and we always have an interesting pipeline on that front,” he continued. “The way I think about it, is we follow our criteria: Is it going to strengthen the company strategically, is it going to be well received and help the customers, and clearly is it going to create shareholder value as measured by the rates of returns on those investments?”