THERMO FISHER SCIENTIFIC INC. TMO

Thermo Fisher Scientific had an outstanding year for innovation in 2025, launching several high-impact products across its businesses. Key introductions included the Thermo Scientific Orbitrap Astral Zoom, a mass spectrometer offering enhanced sensitivity and speed for precision medicine, and the 5-liter DynaDrive single-use bioreactor for bioproduction. In electron microscopy, the Krios 5 Cryo-TEM advanced structural biology, while the Helios MX1 plasma-focused ion beam SEM was launched for semiconductor analysis. The Ion Torrent Oncomine Dx Target Test received another FDA approval as a companion diagnostic, and the EXENT System received U.S. 510(k) clearance for multiple myeloma diagnosis, positioning the company well for future growth.

The company reinforced its 'trusted partner' status by anticipating and meeting customer needs, offering expertise beyond just technologies and services. The Accelerator drug development solution, integrating CDMO and CRO offerings, saw outstanding customer adoption and secured meaningful wins by reducing development timelines and improving decision-making. Strategic partnerships were expanded, including a technology alliance with the Chan Zuckerberg Institute for Advanced Biological Imaging and a collaboration with OpenAI to embed AI capabilities in products and operations, aiming to accelerate scientific breakthroughs and drug development.

Thermo Fisher executed its capital deployment strategy effectively in 2025, deploying approximately $16.5 billion. This included $13 billion for strategic M&A and $3.6 billion returned to shareholders through buybacks and dividends. Notable acquisitions included Solventum's filtration and separation business, enhancing bioproduction capabilities, and Sanofi's sterile fill-finish site, expanding U.S. drug product manufacturing. The definitive agreement to acquire Clario for approximately $9 billion, a leader in digital endpoint data solutions, is expected to close by mid-2026 and be accretive to adjusted EPS by $0.45 in the first 12 months of ownership.

The PPI Business System continued to be a critical enabler of performance in 2025, allowing the company to actively manage costs, drive operational excellence, and deliver strong earnings growth amidst a dynamic environment. PPI facilitated agility and discipline, empowering colleagues to continuously improve processes and serve customers more effectively. The integration of artificial intelligence into PPI is further enhancing its impact, streamlining internal operations and strengthening execution for future growth.

The pharma and biotech end market delivered high single-digit growth in Q4 and mid-single digits for the full year, led by strong bioproduction and clinical research performance. Management noted positive sentiment from pharma and biotech customers regarding their ability to navigate government policies and excitement about their pipelines. Biotech funding is also showing signs of improvement, though with a typical 6-month lag between funding flow and spending. The company's unique capabilities and 'trusted partner' approach position it well to capitalize on these trends, with expectations for mid-single-digit plus growth in this segment.

The Analytical Instruments segment achieved flat organic revenue growth in Q4 and modest growth for the full year, despite headwinds in academic/government funding and China. Performance was driven by strong innovation, particularly in chromatography and mass spectrometry, and the next generation of cryo electron microscopy. The business performed well with pharma and biotech customers. The company continues to apply AI to these capabilities, including a collaboration with NVIDIA, to strengthen the segment and drive demand for breakthrough solutions.

The academic and government end market experienced low single-digit declines in Q4 and for the full year, primarily due to macro conditions in the U.S. and China. Management anticipates continued customer caution in the U.S. until a finalized NIH budget is passed, expecting a flat to slightly up budget. While this should create tailwinds, the company's guidance assumes a relatively cautious environment for this segment in 2026, with potential for improvement in subsequent years.