Specialist
Former VP at Thermo Fisher Scientific Inc
Agenda
- Clinical diagnostics and LC-MS (liquid chromatography-mass spectrometry) operating environment, plus these segments’ evolution within Thermo Fisher (NYSE: TMO)
- Thermo Fisher’s diagnostics portfolio and innovation strategy, entry into C> (cell and gene therapy), LC-MS and serological testing
- Competitive landscape analysis vs key medical supply players, including Agilent (NYSE: A), Danaher (NYSE: DHR), Shimadzu (TYO: 7701), VWR (NYSE: AVTR) and Waters (NYSE: WAT)
- Thermo Fisher’s integrative technologies aimed at digital integration of workflow and results
- 12-18-month growth outlook and potential future acquisition strategy, including possible areas of expansion and divestitures
Questions
1.
Could you opine on the significant shifts and developments occurring within the clinical diagnostics testing market?
2.
The global mass spec detector market is expected to grow at a 9.1% CAGR from 2022-28. How has LC-MS [liquid chromatography-mass spectrometry] technology evolved over the past couple of years and how has that impacted Thermo Fisher? How have simplicity and speed added to the process, even speaking to compliance and sensitivity increases?
3.
Thermo delivered very strong financial results in Q1 2022, like it always does, with 16% core organic growth and USD 1.68bn of COVID-19 testing revenue. How do you expect margins and pandemic-related revenues to be hindered, given the pandemic plateauing and the decline of serological testing?
4.
Thermo spent about USD 40m on acquisitions in Q1 2022 vs USD 133m in Q1 2021, including Peprotech, PPD and Mesa Biotech. It wanted to be more integrated into the biotech and pharma space and started to migrate into CROs [contract research organisations], acquiring PPD in December 2021. What are your thoughts on how this integration is progressing? Has Thermo been able to successfully implant itself into the CRO space, or have other pure CRO players gained more traction there? Even though the company is a behemoth, as people call it, it does have other things to worry about.
5.
Thermo and Charles River recently joined Multiply Labs’ quest to automate cell therapy and production by reactors, incubators and quality control testing. How much of a value add could end-to-end automation of cell therapy be for Thermo in the near future?
6.
Recently, Thermo collaborated with TransMIT on a high-performance Orbitrap MS imaging platform. How effective could a platform combining TransMIT’s ion source and Orbitrap’s MS technology be in the spatial distribution mapping of a variety of molecules? Experts say Thermo has the most innovative MS tech on the heels of the Orbitrap tech. How has the Orbitrap tech evolved over the past couple of years and what are the strengths, weaknesses and pain points?
7.
What is your opinion on the efficacy of Thermo’s expanded LC-MS platform, Tox Explorer Collection, to identify analytes in complex matrices as well as provide an enhanced coverage? How much more screening diversification of compounds does this expansion demonstrate?
8.
Thermo recently launched its Thermo Q Exactive UHMR [Ultra-high Mass Range] direct mass technology mode, a novel MS solution that deciphers complex mixtures of large molecules. What is its potential to provide insight into proteoforms, biotherapeutics and next-gen drug modalities? Do you have any comments on this?
9.
What are some potential drawbacks regarding Thermo’s LC-MS offerings that we haven’t covered? We covered the strengths, but are there any risks?
10.
How efficient has Thermo been on the software side in terms of the integration between LC and MS?
11.
What are Thermo’s opportunities to further develop and enable pharma and biotech customers, or what is the company’s ability to retain customers? It has had a reputation of being particularly sticky in the past in terms of the ability for customers to switch. Has this evolved in the past couple of years and has the stickiness changed regarding the switch between the two?
12.
Thermo spent about USD 364m at the end of Q1 2022 on R&D expenses. How would you assess the company’s efforts to drive innovation through R&D and movement towards more pioneering technologies, such as those we discussed earlier? What areas should it strive for and what challenges is it facing regarding its innovation culture?
13.
Waters and Sciex partnered to offer customers Sciex’s MS platform mixed with Waters’ LC instruments. How has this partnership played out and how does it impact Thermo’s MS segment? How would you assess the company’s MS technology compared to Sciex’s MS systems? I know Sciex has an omics-based solution and Thermo has been the pioneer in that segment, so do you think Sciex has taken some of Thermo’s market share there? What’s the effect on Thermo?
14.
I’ve heard Sciex’s MS is much more expensive compared to Thermo’s. How might Thermo be focusing on performance rather than cost, and what is the pricing strategy here relative to its competitors’? How might lowering costs affect sales volume and be an issue for the company’s margins?
15.
Thermo has built its image on being a one-stop shop system, focusing on a variety of different service lines and areas. There are only a few players big enough to compete or share wallet with the company, so can you comment on the competitive landscape relative to Danaher, VWR, Agilent, Sciex and Shimadzu, its biggest competitors? How does breadth vs differentiation play out for Thermo with price? How much of a value proposition is the company’s bundling strategy for customers?
16.
Which smaller, niche competitors could compete with Thermo in its other service lines? Do you believe in a more curated portfolio with better quality, like the company’s competitors have, or in Thermo’s breadth of offerings, which comes at a price of quality?
17.
What 2-3 key market takeaways should investors pay attention to? What questions should we be asking about the R&D clinical diagnostics and LC-MS market to gain more exposure? What’s your near-term outlook for Thermo and the risks and potential consolidation activity?
