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Thermo Fisher (TMO) Gains Government Contract for Pipette Tip

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Thermo Fisher Scientific Inc. (TMO - Free Report) recently secured a $192.5-million contract from the U.S. Department of Defense (DoD) to ensure reliable domestic production of pipette tips. The DoD contract was issued on behalf of and in coordination with the U.S. Department of Health and Human Services (HHS). With this, Thermo Fisher will co-invest with the U.S. government to build a new, state-of-the-art, energy efficient manufacturing facility for pipette tips.

Pipette tips are used within research and diagnostic laboratories to dispense precise amounts of liquid. These are used to protect pipettes (laboratory tool to transport a measured volume of liquid) from contamination and also reduce cross contamination risks. Notably, in mid-2020, Thermo Fisher announced its own investments to increase pipette tip production capacity to support COVID-19 testing.

This recent contract awarded by the DoD is likely to bolster Thermo Fisher’s Laboratory Products and Services business.

New Site in North Carolina

Thermo Fisher’s new center of excellence in laboratory consumables manufacturing and operations will be built in North Carolina. It will be designed in line with the company’s carbon neutrality goals. The construction is expected to be fully completed by third-quarter 2024, with pipette tip manufacturing starting as early as third-quarter 2023. This site is expected to create several new jobs in the region. It also has the potential for future expansion across a variety of high-demand product lines.

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Per management, the DoD award and the resulting capacity will ensure that future demand surges in the United States, from the current COVID-19 pandemic to the next crisis, will be met with greater supply assurance.

More in the News

Thermo Fisher has invested more than $180 million to boost its laboratory plastics consumables production and another $600 million to increase global bioprocessing capacity from the onset of the pandemic, since laboratory consumables have been vital in global COVID-19 mobilization.

The company also opened new sites dedicated to manufacturing viral transport media used in COVID-19 sample collection and cGMP plasmid DNA used in mRNA-based vaccines.

Industry Prospects

Per a report published in IndustryARC, the pipette market is expected to see a CAGR of 4.1% during 2021-2026. Factors driving market growth include a surge in usage of the pipettes in the laboratories owing to an exponential rise in molecular biology research and increasing investments from key players across the world to produce high-quality pipettes given the growing requirement for accuracy. Further, pharmaceutical market growth coupled with investments in research and development and increasing drug approvals is likely to propel the market.

Given the substantial market prospects for pipette, the recent pipette tips contract awarded to Thermo Fisher in the United States seems well-timed.

Notable Developments

In September 2021, Thermo Fisher’s clinical sequencing business and AstraZeneca collaborated under a multiyear, global agreement, to co-develop next-generation sequencing-based companion diagnostics. This partnership is intended to support AstraZeneca's expanding portfolio of targeted therapies.

In August 2021, the company’s Thermo Scientific EliA SmDP-S test received FDA authorization to aid the diagnosis of Systemic Lupus Erythematosus (SLE). This new test reduces the number of false positive results and offers a more precise diagnosis of SLE. It instills greater confidence in clinicians for differentiating SLE from mixed connective tissue disease owing to its improved immuno-chemical specificity.

In the same month, Thermo Fisher received pre-market approval from the FDA for its Oncomine Dx Target Test as a companion diagnostic for Servier’s TIBSOVO (ivosidenib tablets). The Oncomine Dx will be used to identify patients with isocitrate dehydrogenase-1 (IDH1) mutated cholangiocarcinoma (CCA), who are eligible for treatment with TIBSOVO. The TIBSOVO is authorized for the treatment of adult patients with previously treated, locally advanced or metastatic CCA with an IDH1 mutation as detected by an FDA-approved test.

Share Price Performance

The stock has outperformed its industry over the past year. It has grown 37.9% compared to the industry’s growth of 17.8%.

Zacks Rank and Key Picks

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

A few better-ranked stocks from the Medical-Instruments industry include Intuitive Surgical, Inc. (ISRG - Free Report) , Semler Scientific Inc. (SMLR - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .

Intuitive Surgical, which carries a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 9.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Semler Scientific, sporting a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 25%.

IDEXX, carrying a Zacks Rank #2, has a long-term earnings growth rate of 19.9%.