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Thermo Fisher Scientific Continues to See Strong Demand for Pandemic-Related Products and Services

NEW YORK – Demand for Thermo Fisher Scientific's products and services around the response to COVID-19 remains strong, a trend the company expects to continue into 2021 and beyond.

On Wednesday, Thermo Fisher reported $2 billion in third quarter revenues related to the COVID-19 response, accounting for 23 percent of its overall revenues and 31 percent of the firm's 36 percent growth in the quarter.

Most of the $2 billion was related to COVID-19 testing, with the single largest contribution coming from the company's proprietary TaqPath COVID-19 PCR kits, according to CEO Marc Casper, though there was also "significant revenue" related to instrument sales and laboratory-developed COVID-19 tests, as well as to sample preparation equipment and reagents.

"We're now recognized by our customers as a scale player in infectious disease testing," Casper said during a conference call to discuss the financial results. "We significantly increased our installed base of sample preparation and PCR instruments over the last nine months, and that will create more opportunities for us going forward."

In general, he sees testing as another tool in the efforts to counter the pandemic. "Managing a pandemic is around social distancing, mask wearing, good hygiene, all of those things, and testing is a valuable supplemental tool to that," he said.

Casper highlighted the recent launch of the Amplitude Solution, a high-throughput real-time PCR molecular diagnostic system for testing up to 6,000 samples per day for COVID-19. The system, released in early August, combines the company's Applied Biosystems QuantStudio 7 Flex Real-time PCR instruments with Tecan Fluent Laboratory Workstation liquid handling platforms and uses the TaqPath COVID-19 Combo Kit. Customers enter into a supply agreement with Thermo Fisher to secure a reliable supply of reagents and consumables. The company said it was planning to submit the system to the US Food and Drug Administration for Emergency Use Authorization, as well as to other regulatory authorities around the world.

Casper said the Amplitude Solution has the highest throughput of any COVID-19 testing system in the industry, and Thermo Fisher expects it to support both testing of patients and screening of asymptomatic individuals to support "return to life" programs.

The system has already been installed at several customer sites, and the company has seen demand for it from governments, reference labs, and hospital systems. "It is a nichey application but drives enormous volume," Casper said, adding that Amplitude "will be a good growth driver."

Overall, Thermo Fisher expects demand for its COVID-19 PCR testing solutions to remain strong, even as rapid antigen tests from competitors are entering the market. "We believe that PCR testing will continue to be very relevant to our customers because it gives you the most accurate information," Casper said, adding that beyond Q4, "we expect that those products will continue to be relevant in 2021 because unfortunately, the pandemic is still with us."

In addition to PCR testing, the company has increased its supply of other COVID-19 testing components. Its viral transport media business grew rapidly in Q3, Casper said, and is expected to increase even further. To support this, Thermo Fisher recently announced plans to open a new facility for viral transport media production in Scotland that is expected to come online at the end of the year. Furthermore, it is "significantly expanding" its capacity for lab plastics production, Casper said.

Sales of personal protective equipment also contributed to COVID-related revenues but on a smaller scale. At the beginning of the pandemic, prices for PPE were high as there were "massive supply constraints," he said, but prices have since come down, while volumes remain high.

Thermo Fisher is also seeing increasing revenues from products and services related to the development of COVID-19 vaccines and therapies, such as cell culture media, single-use lab supplies, and purification resins. In addition, the company's enzymes and nucleotides are playing an increasing role in this area, and the firm is increasing its production capacity for these. Thermo Fisher's pharma services business, too, is contributing to vaccine and therapy development, Casper noted.

Overall, COVID-19-related revenues contributed to several of Thermo Fisher's business segments in Q3. Most of these revenues were recognized by the life sciences solution segment through sales of test kits, PCR and sample prep instruments, and reagents, as well as sales of therapy and vaccine production supplies.

They also contributed to specialty diagnostics revenues through sales of molecular controls for testing kits and viral transport media. In addition, they added to laboratory products and services revenues through the pharma services business for therapy and vaccine development and through sales of PPE, plastics, and cold storage equipment.

In the fourth quarter, Thermo Fisher expects COVID-19 response revenues to decline sequentially to $1.75 billion from $2 billion in Q3, although Casper noted that it is currently difficult to predict revenues because there is "less visibility" for the month of December, adding that "it seems like demand should be strong."

Overall, he said, Thermo Fisher believes that its efforts to expand capacity for COVID-19-related products and services will pay off beyond the pandemic. "We're significantly adding capacity across our biosciences, bioproduction, and pharma services businesses, creating an infrastructure that will position us incredibly well for the future," he said, as these investments can be repurposed for other applications.