8-KOther Events

THERMO FISHER SCIENTIFIC INC. 8-K Report, Corporate Update (Nov 10, 2009)

Filed November 10, 2009For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) has announced that Inverness Medical Innovations Inc. will terminate its contract for Biosite products, effective July 1, 2010. This contract was crucial for TMO's healthcare market business, involving the purchase of Biosite products for resale. The company anticipates a significant revenue impact, with sales of Biosite products in 2010 expected to be less than half of the 2009 level of approximately $200 million. In response to this termination, which TMO attributes to its own strategic expansion of diagnostic solutions, the company has secured a new supplier for diagnostic products. This new agreement is projected to generate around $40 million in revenue for 2010, partially mitigating the loss from the Biosite product sales. Investors should monitor TMO's efforts to replace this revenue stream and its broader strategy in the diagnostic solutions market.

Key Highlights

  • 1Inverness Medical Innovations Inc. has elected to terminate its contract with Thermo Fisher Scientific for Biosite products, effective July 1, 2010.
  • 2Thermo Fisher Scientific currently purchases Biosite products for resale to third-party customers under this contract.
  • 3The company expects approximately $200 million in revenue from Biosite product sales in 2009.
  • 4Sales of Biosite products in 2010 are projected to be less than half of the 2009 level.
  • 5Thermo Fisher Scientific attributes Inverness's decision to its own recent strategic expansion in diagnostic product offerings.
  • 6The company has signed an agreement with a new supplier for diagnostic products, expecting to generate approximately $40 million in revenue from these products in 2010.

Frequently Asked Questions

Thermo Fisher Scientific expects a significant revenue reduction. Biosite product sales, which generated approximately $200 million in 2009, are projected to be less than half of that amount in 2010 and minimal thereafter. The company anticipates about $40 million in revenue from a new supplier to partially offset this loss.

Thermo Fisher Scientific believes Inverness's decision is a response to TMO's strategic move to expand its product offerings, aiming to provide customers with a broader range of diagnostic solutions. Inverness likely intends to sell directly to customers.

The company has already entered into an agreement with a new supplier of diagnostic products. This new partnership is expected to generate approximately $40 million in revenue in 2010, helping to mitigate the impact of the Biosite product contract termination.

The termination of the contract with Inverness Medical Innovations Inc. for Biosite products will be effective on July 1, 2010.