Thermo Fisher (TMO) Partners With CSL to Expand Pharma Arm

Zacks Equity Research

Thermo Fisher Scientific Inc. TMO recently inked a partnership deal with CSL Limited with the aim to meet the rising demand for biologic therapies. Notably, through the collaboration, CSL’s broader manufacturing objectives will be expanded.

The partnership, a long-term lease agreement with CSL, will enable Thermo Fisher to operate a new state-of-the-art biologics manufacturing facility in Lengnau, Switzerland, post the completion of its construction in mid-2021.

Through the partnership, Thermo Fisher will support CSL's product portfolio by leveraging its pharma services network, including drug product development, biologics manufacturing, sterile fill-finish, packaging and clinical trials logistics.

With the recent alliance, Thermo Fisher aims to strengthen its Pharma Services business.

Rationale Behind the Alliance

Per Thermo Fisher’s management, the Lengnau facility will meaningfully expand its pharma services capacity and capabilities. Apart from adding a high-volume production site, it will also be able to address a variety of manufacturing requirements for its customers, including CSL. Further, Thermo Fisher believes that this approach will enable it to retain its customer base by taking care of their every need.

At present, Thermo Fisher will support manufacturing of CSL's next-generation product for hemophilia patients at the Lengnau site. Apart from this, the site will have highly flexible bioproduction technologies, including single-use and stainless steel. This will enable it to provide a pathway from development to large-scale production with increasing customer requirements. At a later stage, Thermo Fisher plans to expand the utility of the site to include additional biopharma customers.

Industry Prospects

Per a report by Coherent Market Insights published on GlobeNewswire, the global biologics market is projected to reach a value of $255.19 billion in 2019 and see a CAGR of 7.6% between 2019 and 2027. Factors like rise in prevalence of target chronic diseases, increase in unhealthy lifestyle habits, and growing demand and higher acceptability of innovative therapies are expected to drive the market.

Given the market potential, the inking of the deal has been timed well.

Other Recent Collaborations

Of late, Thermo Fisher has been actively inking partnership deals to expand its portfolio.

It announced an exclusive license agreement with MSAID GmbH in May to develop and commercialize deep learning tools for proteomics, thus making MSAID's Prosit-derived framework widely accessible to proteomics laboratories.

In the same month, Thermo Fisher announced that it is continuing its collaboration with Biognosys to advance data independent acquisition mass spectrometry-based workflows.

Further in May, Thermo Fisher received a contract from the U.S. government to provide highly specialized viral transport media for COVID-19 sample collection.

In April, Thermo Fisher along with Hamilton Company introduced forensic laboratory-qualified automated nucleic acid extraction platform, ID NIMBUS Presto assay ready workstation, to extract nucleic acids from evidentiary crime scene samples.

Price Performance

Shares of the company have gained 31.6% in the past year compared with the industry’s 13.9% growth and the S&P 500’s 11.1% rise.


Zacks Rank & Stocks to Consider

Currently, Thermo Fisher carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Aphria Inc. APHA, Surmodics, Inc. SRDX and Owens Minor, Inc. OMI.

Aphria’s long-term earnings growth rate is projected at 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently sports a Zacks Rank #1.

Owens Minor’s long-term earnings growth rate is estimated at 8.3%. It currently carries a Zacks Rank #2.

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