36th annual j.p. morgan healthcare...

The world leader in serving science

Marc N. CasperPresident and Chief Executive Officer

January 9, 2018

36th Annual J.P. Morgan Healthcare Conference

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Various 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 September 30, 2017, 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; 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.

Safe Harbor / Non-GAAP Measures

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Unmatched Depth• Leading innovative technologies

• Deep applications expertise

• Premier laboratory productivity partner

• Leading pharma services provider

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

We Are The World Leader in Serving Science

Global Scale • Approximately 65,000 employees globally

• $20 billion in annual revenue

• Unparalleled commercial reach

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Attractive Revenue Profile Positions Us for Growth

Balanced and DiverseCustomer Base

Growing Presence in Emerging Markets

Strong RecurringRevenue Mix

NOTE: Pro forma revenue and percentages based on LTM through Q3 2017.

Total Pro Forma Revenue Including Patheon: ~$22B

Industrial& Applied

20%

Diagnostics& Healthcare

21%Pharma

& Biotech

36%

Academic &Government

23%

Consumables

53%

Services

22%

Instruments

25% Europe

24%

Asia-Pacific

21%

ROW

3%

52%

North America

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Complementary Segments Create Competitive AdvantageAnalytical Instruments

Revenue: $4.6B Adj. Operating Income: 21.2%Life Sciences Solutions

Revenue: $5.6B Adj. Operating Income: 32.4%

Laboratory Products and ServicesPro Forma Revenue: $8.8B Pro Forma Adj. Operating Income: 12.5%

Specialty DiagnosticsRevenue: $3.4B Adj. Operating Income: 26.9%

Microbiology

Antimicrobial SusceptibilityTesting Solutions

QuantStudioDx R qPCR

Genetic Sciences

Laboratory Chemicals

Bioproduction

Cell Culture Reagents

Biosciences

Life Science Reagents

MassSpectrometry

Fusion Lumos MS

Chromatography

VanquishUHPLC

Electron Microscopy

Titan Krios TEM

Reproductive Health

Microarrays

iCAP Triple Quad MS

ClinicalDiagnostics

PCT Biomarkers

Lab Equipment & Consumables

TSX ULT Freezers

ImmunoDiagnosticsImmunoCAP Allergy andEliA Autoimmunity Tests

NOTE: Revenue and Adjusted Operating Income Margins are based on LTM through Q3 2017. Revenue and Adjusted Operating Income Margin for Laboratory Products and Services are calculated on a Pro Forma basis which includes the pre-acquisition results of Patheon for the entire period

SeqStudioCE System

E1 ClipTipPipette System

Clinical Oncology

Next-Gen Sequencing

TransplantDiagnostics

NXType High-Resolution Genotyping

Chemical AnalysisGemini Handheld Analyzer

Channel

BioPharmaServices

Cryostar Tissue Sectioning

Pathology

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Consistently Delivering Excellent Financial Performance

2012 2016 2012 2016

9% CAGR 14% CAGR

Adjusted EPSRevenue

Leveraging our industry leadership to achieve outstanding results

12% CAGR

Free Cash Flow

2011 Q3 2017 LTM 2011 2011Q3 2017 LTM Q3 2017 LTM

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2017 Goals (as communicated at JPM Conference on January 10, 2017)

• 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

• Capture Synergies from Affymetrix and FEI Acquisitions

• 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

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2017: Another Excellent Year of High Impact Innovation

• Greater understanding of protein structure and function

• Leading cryo-electron microscopy and high-resolution mass spectrometry platforms

• Applying precision medicine approach in the real world

• Unique portfolio spanning genetic and protein analysis, biobanking, informatics and diagnostics

• Sample-to-answer solutions• Integrated chromatography and mass

spectrometry workflows combining instruments, software and consumables

• More accurate and cost-effective diagnostics

• Developing mass spectrometry-based patient sample-to-answer clinical analyzer

• Effective data management and analytics • Comprehensive digital science capabilities

Industry-leading R&D Investment Customer Needs Our Solutions

Innovation investments put us at the forefront of scientific advances

6.6% of Total Manufacturing

Revenue

$0.9B

NOTE: R&D and revenue based on LTM through Q3 2017.

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• Greater understanding of protein structure and function

• Leading cryo-electron microscopy and high-resolution mass spectrometry platforms

• Applying precision medicine approach in the real world

• Unique portfolio spanning genetic and protein analysis, biobanking, informatics and diagnostics

• Sample-to-answer solutions• Integrated chromatography and mass

spectrometry workflows combining instruments, software and consumables

• More accurate and cost-effective diagnostics

• Developing mass spectrometry-based patient sample-to-answer clinical analyzer

• Effective data management and analytics • Comprehensive digital science capabilities

Industry-leading R&D Investment Customer Needs Our Solutions

Innovation investments put us at the forefront of scientific advances

6.6% of Total Manufacturing

Revenue

$0.9B

NOTE: R&D and revenue based on LTM through Q3 2017.

SeqStudioGenetic Analyzer

Oncomine Dx Target Test

Q Exactive HF-X Quadrupole-Orbitrapmass spectrometer

ClipTip cloud-connectedelectronic pipette system

2017 Product Introduction Highlights

2017: Another Excellent Year of High Impact Innovation

Krios G3i Cryo-TEM

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China Market Dynamics

$19.8B Revenue

China10%

Developed Markets79%

Emerging Markets account for 21% of revenue

Capitalizing on attractive fundamentals and continuing to gain share

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NOTE: Revenue and geographic percentages in pie chart based on LTM through Q3 2017.

Scale in Emerging Markets: China Example

Other Emerging Markets

11%

2011 2016 LTM Q3 2017

$0.6B

$1.7B

$2.0B

Thermo Fisher China Revenue

• Attractive fundamentals

• $9B market growing at 9% CAGR

• 13th 5-Year Plan focused on innovation, healthcare and precision medicine, environment and food safety

• 2017 progress:

• Opened Precision Medicine Customer Experience Center in Guangzhou, China

• Increased manufacturing revenue by over 10% to support growing local and global demand

• Grew e-business sales by over 50%

16% Average organic growth

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Quality

Productivity

CustomerAllegiance

Consistently deliver world-class products and services

Exceed expectations to maximize customer success

Improve operating and process efficiency

to strengthen our competitive

advantage

• Accelerate organic growth

• Expand margins

• Enhance cash flow

Impact of PPI:

Practical Process Improvement (PPI) Business System Drives Operational Excellence

Adjusted Operating Margin %

2011 Q3 2017 LTM

23.4%

18.4%

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Affymetrix & FEI: On Track to Meet or Exceed Deal Expectations

FEI(acquired September 2016)

• Organic growth accelerated from low single-digits

to strong double-digits

• On track to exceed total synergy target of $80M by

Year 3 (2019):• PPI Business System has dramatically increased

manufacturing capacity which has helped capture

incremental growth

• ROIC hurdle expected one year earlier

versus original deal model

Affymetrix(acquired March 2016)

• Good growth in 2017 driven by new product

introductions and leveraging our commercial reach

• On track to exceed total synergy target of $70M by

Year 3 (2019):• Strong contribution from PPI Business System

• Consolidate business infrastructure into our organization

• On track to achieve deal model

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2017 Capital Deployment Summary

• $750M in Share Buybacks

• $240M in Dividends

• $7.8B in M&A• $7.4B for Patheon ($5.7 Debt/ $1.7B Equity)• $0.4B for Finesse Solutions, Core Informatics, Linkage Biosciences and Phenom World

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Patheon Overview

St. Louis, MO

Manati, Puerto Rico

Florence, SC

Greenville, NC

Linz, Austria

Ferentino and Monza, Italy

Locations

Drug Substance Services - BiologicsDrug Substance Services - API

Drug Product ServicesPharma Development Services

4%

28%68%

EuropeNorth

America

ROW

Revenue by Geography

12%

27%Revenue by Business / Capability

61%

Pharmaceutical Development Services

• Leading global provider of CDMO services• Revenue: $1.9B• Adjusted operating margin of 17%• ~9,000 employees globally • 26 manufacturing and development locations

Drug Substance Services

Serves API Manufacturing Segment

Drug Product Services

Serves Finished Dosage Form

Manufacturing Segment

Note: Financials reflect LTM as of Jan 31, 2017

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Improving Adjusted ROIC

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.

Adjusted ROIC10.7%

(w/o M&A)

9.8%9.8%

Q3 2017Q3 2016

• Expanding adjusted ROIC by 90-120 bps annually on an operational basis

Capital Deployed on M&A:

• FY 2016: $5.5B (e.g., FEI and Affymetrix)

• FY 2017: $7.8B (e.g., Patheon)

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2017 Goals (as communicated at JPM Conference on January 10, 2017)• 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






Successfully achieved key business goals & delivered solid returns

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2018 Goals

• 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

• Margins/Below the Line• Leverage PPI business system throughout organization to reduce cost and enhance productivity• Take full advantage of U.S. tax reform to reduce total company tax rate

• Patheon: Successfully integrate, drive growth and capture synergies

• Capital Deployment• Keep momentum on driving returns from our acquisitions and other investments• Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends,

while continuing debt repayment

36th annual j.p. morgan healthcare...

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