34th annual j.p. morgan healthcare...

The world leader in serving scienceProprietary & Confidential

Marc N. CasperPresident and Chief Executive Officer

January 10, 2017

35th Annual J.P. Morgan Healthcare Conference

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Safe Harbor / Non-GAAP MeasuresVarious remarks that we may make in the following presentation about the company’s future expectations, plans and prospects

constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of

1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important

factors, including those discussed in our Form 10-Q for the quarter ended October 1, 2016, under the caption “Risk Factors,” which is on

file with the Securities and Exchange Commission and available in the “Investors” section of our website under the heading “SEC

Filings.” Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include

risks and uncertainties relating to: the need to develop new products and adapt to significant technological change; implementation of

strategies for improving internal growth; general economic conditions and related uncertainties; dependence on customers' capital

spending policies and government funding policies; the effect of exchange rate fluctuations on international operations; the effect of

healthcare reform legislation; use and protection of intellectual property; the effect of changes in governmental regulations; and the effect

of laws and regulations governing government contracts, as well as the possibility that expected benefits related to recent or pending

acquisitions may not materialize as expected. While we may elect to update forward-looking statements at some point in the future, we

specifically disclaim any obligation to do so, even if estimates change, therefore, you should not rely on these forward-looking

statements as representing our views as of any date subsequent to today.

During this presentation, we will be referring to certain financial measures not prepared in accordance with generally accepted

accounting principles, or GAAP, including adjusted EPS and adjusted operating margin. The non-GAAP financial measures of Thermo

Fisher’s results of operations and cash flows included in this presentation are not meant to be considered superior to or a substitute for

Thermo Fisher’s results of operations prepared in accordance with GAAP. Definitions of these non-GAAP financial measures and, for

historical periods, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available

under the heading “GAAP/Non-GAAP Reconciliation & Financial Package” in the “Investors” section of our website,

www.thermofisher.com.

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We Are The World Leader in Serving Science

Unmatched Depth• Leading innovative technologies

• Deep applications expertise

• Premier laboratory productivity partner

• >50,000 employees in 50 countries

• $18 billion in annual revenue

• Unparalleled commercial reach

Global Scale

Our Mission: To enable our customers to make the world healthier, cleaner and safer

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Attractive Customer, Product & Geographic Mix

End Markets Products Geographies

62%Consumables

24% Europe

24%

Instruments Equipment &

Software

Services14%

53%North America19%

Asia-Pacific

ROW4%

25%

Academic & Government

19%

Industrial & Applied

Diagnostics& Healthcare

25% 31%

Pharma& Biotech

Balanced and diversecustomer base

Growing presence in emerging markets

Strong recurring revenue mix

Note: Percentage estimates based on unaudited LTM combined revenues of Thermo Fisher Scientific through Q3 2016

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Four Complementary Reporting Segments

Percentages based on unaudited LTM revenues through Q3 2016 including estimates for intercompany eliminations and other accounting policy adjustments.

• Clinical Assays

• Immunodiagnostics

• Microbiology

• Anatomical Pathology

• Transplant Diagnostics

• Healthcare Market Channel

• Biosciences

• Genetic Sciences

• Bioproduction

• Chromatography and Mass Spectrometry

• Chemical Analysis Instruments

• Environmental and Process Instruments

• Research and Safety Market Channels

• Laboratory Products

• BioPharma Services

Life SciencesSolutions

26%

SpecialtyDiagnostics

18%

AnalyticalInstruments

18%

Laboratory Products and Services

38%

Total revenues

~$18B

Leading positions in attractive niche diagnostics segments

Extensive portfolio to accelerate life sciences research, discovery and diagnosis

Industry-leading technologies to solve a broad range of complex analytical challenges

Industry-leading offering to increase laboratory productivity

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Complementary Segments Fundamental to Our Growth Strategy

• High-impact innovation• Largest R&D spend in our industry

>$800M*• Life science tools into the clinic• Laboratory technologies for

applied markets• R&D centers of excellence (COE)

and ability to leverage cross-business technologies and programs

• Unique customer value proposition• Ultimate channel partner• Leading e-Business presence• Extensive corporate accounts program• Comprehensive services offering

• Scale in emerging markets • Customer reach and superior customer

experience• Manufacturing COEs in low-cost regions

Life SciencesSolutions

SpecialtyDiagnostics

AnalyticalInstruments

Laboratory Products and Services

Customer

* R&D spend presented on a pro-forma basis including FEI

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$100B Market

Our OpportunityCapital Deployed2010 – Q3 2016

Dividends

M&A81%

Buybacks16%

3%

$32BDeployed Notable M&A

• 2011 – Dionex, Phadia

• 2012 – One Lambda

• 2014 – Life Technologies

• 2016 – Affymetrix, FEI

Share Buybacks • $5.1B deployed to

repurchase 78M shares

Dividend• Dividend payer

since 2012

Continuing our disciplined approach to capital deployment

100s of smaller

companies

Thermo Fisher Scientificplus top 2competitors

Strong Track Record of Effectively Deploying Our Capital

Market Growing 3 - 5%

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Continuing Our Impressive Track Record

Delivering on our commitment to create shareholder value

$1.87$2.55

$3.02 $2.92$3.43

$4.16$4.94

$5.42

$6.96$7.39

$7.98

Q3’ 16 TTM201420132012201120102009200820072006

Adjusted EPS Performance

2015

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2016 Goals (as presented at JPM Conference on January 12, 2016)

• Capture Year 3 Synergies from Life Technologies Acquisition• Achieve $150M run rate in revenue synergies generating $50M of adjusted operating income

• Revenue• Drive incremental growth by innovating at a rate faster than our competition• Capitalize on our strength in emerging markets through leveraging commercial reach• Seize opportunities in developed markets• Leverage our unique customer value proposition by cross selling our total portfolio

• Margin• Continue to drive cost management through: utilization of global sourcing, expansion

to low-cost regions, rationalization of facilities, and leveraging our PPI business system

• Capital Deployment• Conduct shareholder friendly capital deployment through strategic M&A, share buybacks

and dividends

• ROIC• Continue to deliver on increases in adjusted ROIC

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Life Technologies Acquisition: Unrivaled Leader in Life Sciences

Accelerated growthand driving share gain

• Achieved year 3 synergy targets –realized full run rate of >$300M of cost synergies and $150M of revenue synergies

• Aggressively redeployed investments to fuel growth opportunities

• Leveraging strengths of combined businesses to position Thermo Fisher Scientific for an even brighter future• Commercial reach

• Extensive corporate accounts program• Ultimate channel partner• Scale in emerging markets and APAC

• Benefiting from scalable infrastructure, e-business and supply-chain operations

Organic Growth

2%

4%

5%

6.5%

2013 2014 2015 2016*

NOTE: 2014 organic growth percentage is on a pro forma basis, as if Life Technologies was owned for the entire year.* 2016 organic growth is YTD through Q3’16 on a days adjusted basis

Life Sciences Solutions Segment

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• Margin• Continue to drive cost management through: utilization of global sourcing, expansion to low-

cost regions, rationalization of facilities, and leveraging our PPI business system

• Capital Deployment• Conduct shareholder friendly capital deployment through strategic M&A, share buybacks and

dividends


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Largest R&D Spend in Life Sciences Industry

Life Sciences Solutions

• Launched several new Oncomine assays (e.g., Cell Free Lung DNA assay and BRCA Research Assay)

• Ion AmpliSeq Transcriptome Human Gene Expression Kit

Analytical Instruments

• Q Exactive BioPharma mass spectrometer

• Integrion high-pressure ion chromatography (HPIC)

• Launched a suite of software and Cloud-based solutions for research and applied markets

Laboratory Products

• TSX Series high-performance refrigerators and freezers

• Large capacity blood banking centrifuges

Specialty Diagnostics

• Extended claims of BRAHMS PCT sepsis in the U.S.

• FDA clearance of DRI Hydrocodone assay

• Launched LabLink xL 2.0 software

Option B>$800M* Invested in 2016 to Deliver High-impact Products

* R&D spend presented on a pro-forma basis including FEI

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Developed Markets

81%

Emerging Markets

19%

$18BRevenue

China>$1.5B Revenue

South Korea>$250M Revenue

India>$200M RevenueBrazil

>$100M Revenue

E. Europe, Middle East, Africa

>$550M Revenue

Latin America(excl. Brazil)

>$250M Revenue

S.E. Asia>$350M Revenue

2016 Highlights:• Opened a new state-of-the-art clinical services facility in South Korea

• Partnered with various entities in China to support life sciences research, precision medicine and molecular diagnostics (e.g., Government of Guangzhou, HEALTH BioMed, and West China Hospital)

• Expanded center of excellence in Singapore

Industry-leading Presence in Emerging Markets

NOTE: Revenue based on LTM through Q3 2016* LCR: Low-cost region.

Demonstration labs: 26Total employees: >12,000 LCR* manufacturing revenue: $1.4B| |

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Accelerate research

Support regulatory

compliance

Utilize strategic

outsourcingOptimize

supply chain

Enable technical

innovation

Improve production efficiency

Improve diagnostics

Solve complex analytical

challenges

Increase lab

productivity

Partner on R&D projects

• Unique customer value proposition• Ultimate channel partner

• Comprehensive services offering

• Leading e-Business presence

• Extensive corporate accounts program

Commercial Capabilities are Unmatched in Our Industry

Customer

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dividends


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17.5%

22.5%

PPI Business System Fuels Growth and Profitability

Operational discipline is our foundation for strong earnings growth

Practical Process Improvement (PPI) = Continuous improvement every day

• 5S• Lean• Kaizen• Stand-up meetings• KPI boards

Strategic PPI deploymentfor long-term benefit

• Global sourcing

• Footprint optimization

• Low-cost region manufacturing

• Shared services

• Proven M&A playbook

Our Opportunity

Adjusted Operating Margin %

2010 Q3’16 YTD

Quality

Productivity

CustomerAllegiance

Consistently deliver world-class products and services

Exceed expectations to maximize customer success

Improve operating andprocess efficiencyto strengthen our

competitiveadvantage

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dividends


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2016 Capital Deployment Summary

• $1.25B in Share Buybacks• Includes $250M of share repurchases in December 2016

• ~$240M in Dividends

• ~$5.5B in M&A• $4.2B for FEI• $1.3B for Affymetrix, MTI-GlobalStem, INEL Inc., and divestiture of glassware JV

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Acquisition Completed September 19, 2016

Company Background• Leader in high performance electron microscopy (EM)

Benefits of Transaction• EM complements our mass spectrometry leadership to accelerate advancements in structural biology

• Combined technology portfolio creates new opportunities in attractive material sciences market

• Thermo Fisher’s unmatched global reach opens new opportunities for FEI

• Expect to generate $80M of synergies ($55M from cost and $25M from revenue; Year 1 adj. EPS accretion of $0.30)

TTM Revenue of ~$1B

North America

35%

Europe

24%

41%

APAC & ROW

Services &Software

29%

InstrumentSystems

71%

Acquisition of FEI: New Opportunities in Analytical Instrumentation

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dividends


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Improving Adjusted ROIC

*Life Technologies acquisition fully in ROIC calculation by end of Q1’2015

Note: Adjusted return on invested capital is annual adjusted net income excluding net interest expense, net of tax benefit therefrom, divided by trailing five quarters average invested capital.

10.1% Life Technologies Acquisition Investment*

2013 Q1 2015

2015 Q3 2016

8.9%

9.5%9.8%

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• Margin• Continue to drive cost management through: utilization of global sourcing, expansion to low-cost regions,

rationalization of facilities, and leveraging our PPI business system

• Capital Deployment• Conduct shareholder friendly capital deployment through strategic M&A, share buybacks and dividends


Successfully achieved key business goals & delivered solid returns

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2017 Goals

• Capture Synergies from Affymetrix and FEI Acquisitions

• Revenue• Continue to launch high-impact new products• Leverage our unique customer value proposition by cross selling our total portfolio• Capture further share gain opportunities in emerging markets by continuing to leverage our commercial

reach• Leverage our expansive commercial capabilities to capture the most significant opportunities within our key

end-markets

• Margin• Drive cost management initiatives through global sourcing programs, low-cost region expansion, footprint

optimization, and our PPI business system • Take actions to reduce the adverse impact of FX and higher interest rates on variable rate debt

• Capital Deployment• Continue shareholder friendly capital deployment through strategic M&A, share buybacks, dividends, and

debt repayment

• ROIC• Keep momentum on driving returns from our acquisitions and other investments

34th annual j.p. morgan healthcare...

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