Market position in Life Sciences Solutions
Thermo Fisher Scientific’s (TMO) Life Sciences Solutions business was formed after the acquisition of Life Technologies in 2014. The segment consists of the Life Technologies business and Thermo Fisher’s biosciences business. TMO has since established itself as a leading player in biosciences and offers a comprehensive portfolio of products to fulfill customer needs. The company is also a leader in targeted genomics applications.
TMO’s Life Sciences Solutions segment registered revenue growth of around 11% in 1Q16. The company reported strong growth in biosciences, bioproduction, and next-generation sequencing businesses. Thermo Fisher Scientific has partnered with pharmaceutical companies Pfizer (PFE) and Novartis (NVS) for the development of cancer-related tests. Illumina (ILMN) is one of the direct competitors of Thermo Fisher in the sequencing market.
Future growth potential and opportunities
The organic growth of Life Sciences Solutions has been increasing over the years. In 2015, the segment reported organic growth of ~5%, which exhibits strong capabilities to achieve the $300 million cost synergy and $150 million revenue synergy targets by the end of fiscal 2016.
The company has been leveraging its channel capabilities to achieve these targets, which led to the acquisition of more than 1,000 new Life Sciences Solutions segment customers in 2015. The company has also focused on expanding its footprints across geographies to generate higher growth. The company also plans to focus its investments in markets for genomics where there are higher potential growth opportunities.
Investors can gain exposure to Thermo Fisher by investing in the iShares S&P 500 Growth ETF (IVW), which has ~0.42% of its total holdings in TMO.
Now let’s look at what TMO is doing to increase shareholder value.