NEW YORK – Thermo Fisher Scientific saw its business grow sharply in the second quarter, even as many of its research customers had their operations curtailed or shut down. The company's revenue growth was propelled by demand for products and services related to COVID-19, including diagnostic testing, personal protective equipment, and vaccine and therapy development.
In a conference call to discuss the firm's Q2 financial results, Thermo Fisher's management team provided more insights into the company's COVID-19 diagnostic testing business.
"We created a major business line within a few months and have continued to expand our capabilities," said CEO, President, and Chairman Marc Casper.
Thermo Fisher's PCR technology has always played a role in lab-developed diagnostic tests, he said, but that role "significantly expanded" when the company obtained emergency use authorization from the US Food and Drug Administration for its TaqPath COVID-19 Combo Kit in March. The firm's PCR-based workflow is now used in 50 countries around the world for COVID-19 testing, he added.
In April, the company started ramping up manufacturing of the test kit and helped labs bring large-scale testing online. "Our teams rapidly scaled production at an incredible pace, and we ended the quarter with enough capacity to produce more than 10 million tests per week, should our customers need that level of testing," Casper said. He later clarified that this does not mean the firm actually sells that many tests each week.
Following several amendments, the EUA for the test was expanded in May, he said, adding more different types of PCR instruments that can run the assay and providing additional options for reagents and consumables.
But the "overwhelming demand for testing" also created supply shortages for sample collection materials, Casper said, including swabs, vials, and medium. "The US government came to us for help, and given our understanding of the challenge, we worked with them to significantly ramp up production of highly specialized viral transport media, or VTM, to address this need," he said. Within six weeks, Thermo Fisher built a new facility in Lexena, Kansas, which produced its first VTM vials on July 4, he said.
The company expects demand for PCR-based COVID-19 testing to continue to stay strong at least through Q3, if not beyond. While there has been weaker demand for testing in Europe compared to the second quarter, demand has been picking up in the US, Casper said.
Thermo Fisher also expects to play a role in screening asymptomatic individuals for "back-to-life" programs at workplaces, schools, and other venues, he said, adding that interest in this type of testing has been increasing dramatically.
In addition, he said, the company is developing a COVID-19 antibody test, in collaboration with WuXi Diagnostics and the Mayo Clinic. While he acknowledged that serological tests have had less of an impact than many anticipated, that might change in the future. "As the medical community better understands the immune response and what it means, serological testing will become more relevant," he said.
Moreover, the firm is working on a molecular respiratory panel that can distinguish between COVID-19 and other respiratory diseases, such as the flu, which it plans to have ready for the flu season. "We're working through the regulatory processes to make both these tests available to customers globally," he said.
Casper also commented on the revised acquisition agreement for Qiagen that was announced earlier this month. "Qiagen is making a significant contribution to the global pandemic response, and we believe our new all-cash cash offer of €43 per share reflects the full and fair value of the business in the current environment, while generating strong returns for both sets of shareholders," he said. Under the original March agreement, Thermo Fisher had offered €39 ($45) per Qiagen share.
"We're very excited about this transaction and we look forward to bringing together our complementary offerings to help our customers fight the ongoing pandemic and combat other infectious diseases and emerging healthcare needs," he said. "For our shareholders, we expect strong returns and believe that the accretion will be slightly more favorable than what we articulated in early March."
Thermo Fisher's tender offer for Qiagen's shares ends Aug. 10, he explained, and the firm needs to obtain at least two-thirds of the shares to complete the deal. If not, "the deal is over," he said, and there will be no revised offer. The regulatory process for the acquisition is "on track," and Thermo Fisher still expects the transaction to be completed in the first half of 2021. "Qiagen is an excellent fit for our company and we're excited about the new opportunities we'll have following the close," he said.