Thermo Fisher told investors it is ready to shut the door on 2024, anticipating biotech funding to improve and lingering business insecurity caused by the Covid-19 pandemic to dissipate in 2025.
“Confidence in biotech is improving and funding has been modestly improving as the year progresses,” CEO Marc Casper said during an earnings call Wednesday.
Manufacturers have recently faced biopharma cost cuts, with companies shrinking their drug development pipelines, specifically Covid-19 companies that cut their production needs. But Thermo Fisher said this year will likely be the final year Covid-19 will impact the manufacturing business.
The Inflation Reduction Act, the Biosecure Act and the Novo-Catalent deal have also caused biopharma clients to be cautious about what projects to move forward with. But Casper said Thermo Fisher is a “trusted partner” and “well positioned in the customer base” now that there’s more clarity on how these issues may play out.
The renewed confidence in the manufacturing business has Thermo Fisher expecting improved sales as soon as the fourth quarter of this year, Casper said. William Blair analysts are also “optimistic” that funding is “accelerating.”
While the manufacturer anticipates overall improvement, Casper said that the current market in China is “incredibly muted,” noting that “China has not progressed right in terms of economic activity.” Last week, Merck KGaA said its manufacturing business is also facing headwinds in China.
In the third quarter, Thermo Fisher reported a “flat” revenue of $10.6 billion, compared with $10.57 billion in the same period last year, according to the company’s earnings report on Wednesday.