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Thermo Fisher to Step Up R&D Spend in 2010; Expand Footprint in Low-Cost Regions

SAN FRANCISCO (GenomeWeb News) - Thermo Fisher Scientific intends to increase its R&D spending in 2010 and expand its operating footprint in a handful of low-cost regions around the world.

Speaking today to investors at the JP Morgan Healthcare Conference held here, Thermo President and CEO Marc Casper said that the firm expects its R&D investments to target three key areas: mass spectrometry, specialty diagnostics, and bioscience reagents. However, he did not provide an estimate for the planned increased investment.

The firm faces strong competition in the mass spec field from firms such as Agilent Technologies, Waters, and the MDS/Life Technologies joint venture, which is in the process of being acquired by Danaher. Casper said that he does not expect any change in the competitive landscape due to the Danaher acquisition, adding that the MDS/Life Tech joint venture has "lost considerable market share" to Thermo over the past several years.

"We are ruthlessly focused on winning in that space," Casper said during a Q&A session following his presentation.

Casper also said today that Thermo Fisher intends to expand its footprint in low-cost regions worldwide, specifically India, China, and Mexico, and is targeting revenue growth and expanded distribution in Singapore and Korea in 2010. He noted that the firm's Asia businesses currently bring in more than $1 billion annually.

In addition, Thermo Fisher is in the process of shutting down 21 facilities, Casper noted. He said during a normal year plant consolidation would claim around seven or eight facilities, largely due to a steady stream of acquisitions and subsequent rationalization. After the current shut downs, he expects that the firm will return to its historically normally number of closures.

Casper also noted that as part of efforts to cut costs in 2009, the firm reduced its headcount by 1,200 – that is in addition to 900 jobs cut in the fourth quarter of 2008. The firm currently employs more than 30,000 people worldwide.

In addition to the job cuts and facilities consolidation, during 2009 Thermo Fisher introduced other cost-savings measures, such as a selective reduction in work hours, furloughs, and discretionary spending reductions. However, Casper noted that the firm maintained its R&D investments and its employee-merit increases, adding that morale is high at the firm.

He did not provide any preliminary fourth-quarter or full-year 2009 revenues or guidance for 2010.

However, Casper said that Thermo Fisher's four key goals for 2010 are to drive organic growth; leverage its value proposition to drive greater revenues from its top-20 pharma and biotech accounts; expand its adjusted operating margins; and deploy capital to strengthen its portfolio of products, such as it believes it did with the recent acquisition of diagnostics firm Brahms.

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