Dive Brief:
- Thermo Fisher Scientific said it will make an additional $450 million in cost cuts in 2023, citing a more challenging macroeconomic environment in the second quarter.
- The manufacturer of scientific instruments and laboratory equipment saw customers in biopharma and other industries grow more cautious in the second quarter. At the same time, economic activity in China slowed significantly, CEO Marc Casper said Wednesday on the company’s earnings call.
- The company is reducing headcount across its businesses and de-prioritizing investment in some areas, CFO Stephen Williamson said on the call.
Dive Insight:
Thermo Fisher is feeling the impact of funding challenges that have forced many smaller drugmakers to reduce spending. More than 90 biotech companies have laid off staff this year, according to data compiled by BioPharma Dive.
Thermo Fisher has already reduced staffing levels in California, where it is shuttering some facilities.
The Waltham, Massachusetts-based company lowered its forecast for core organic revenue growth in 2023 to a range of 2% to 4%, from the prior outlook of 7%.
“TMO’s 2023 guide down may be the most widely expected reset ever and only surprising that it didn’t happen sooner,” Jefferies analyst Brandon Couillard said Thursday in a research note.
Second-quarter revenue fell 3% to $10.69 billion.
“Given the more challenging macroeconomic environment at this point, we think it is best to assume that these conditions will persist for the remainder of the year,” Casper said.
Couillard said the scale of Thermo Fisher’s restructuring “diminishes the risk of having to cut again.”
Thermo Fisher “is among the first to pull cost levers,” the analyst said. “Debate from here hinges on whether demand in fact normalizes in 2024.”
Just after the second quarter ended, Thermo Fisher announced an agreement to acquire CorEvitas, a provider of real-world data and clinical insights to pharmaceutical and biotech companies, for about $900 million. The deal is expected to complement the company’s clinical research business.