Dear Shareholders, Marc N. Casper Chairman, President and CEO
To our shareholders, customers and colleagues,
As I reflect on 2022, I am proud of what we achieved. Our team's incredible dedication to our customers and our Mission enabled us to successfully navigate a dynamic environment, exceed our goals and deliver value for all of our stakeholders. I would like to thank our more than 125,000 colleagues, whose passion for enabling our customers to make the world healthier, cleaner and safer fuels our success. And thank you to our customers and shareholders for your continued confidence in us as a partner in building a brighter future for all.
We measure our success in a number of ways – not only by our financial results, but also by being the strongest partner for our customers, by providing an excellent work experience for our colleagues, by creating value for our shareholders and by making a positive impact on society. By all of these measures, it was another exceptional year for Thermo Fisher Scientific.
Outstanding financial results
Starting with our financials, we continued our long track record of outstanding performance. In 2022, we grew our revenue by 15 percent to $44.92 billion, delivered strong earnings results consisting of GAAP diluted earnings per share (EPS) of $17.63 and adjusted EPS¹ of $23.24, and we generated very strong free cash flow¹ of $6.94 billion. We also returned significant capital to our shareholders through $3.5 billion of stock buybacks and dividends.
Our continued success is propelled by our proven growth strategy, which consists of three pillars:
- Developing high-impact, innovative new products
- Leveraging our scale in high-growth and emerging markets
- Delivering a unique value proposition to our customers
We continued to execute this strategy during 2022, and the investments we've made are driving growth and generating strong returns. I'll review our progress within the three pillars.
Commitment to high-impact innovation
Beginning with the first pillar, our focus on high-impact innovation enables our customers to address some of the world's greatest challenges, and in 2022, we invested $1.5 billion in R&D to deliver new technologies across our businesses that are helping our customers achieve their goals. There are so many great examples from the year, and I'll highlight just a few.
In chromatography and mass spectrometry, we extended our industry-leading Thermo Scientific Orbitrap portfolio, launching the Orbitrap Ascend Tribrid mass spectrometer to advance proteomics, metabolomics and cancer biomarker research. We also launched the Thermo Scientific TRACE 1600 Series Gas Chromatograph to increase productivity in analytical testing for food, environmental, industrial and pharmaceutical applications. In electron microscopy, we launched the Thermo Scientific Glacios 2 Cryo-TEM (transmission electron microscope) to help our customers accelerate structure-based drug discovery for debilitating disorders such as Alzheimer's, Parkinson's and Huntington's diseases, as well as research for cancer and gene mutations. In bioproduction, we launched the Gibco CTS DynaCellect Magnetic Separation System to support cell and gene therapy programs.
It was truly a spectacular year of innovation, and we have an exciting pipeline of new products that will be launched in 2023 and beyond.
Leveraging our scale
The second pillar of our growth strategy is leveraging our scale in high-growth and emerging markets to create a differentiated experience for our customers. During the year, we continued to strengthen our capabilities serving these markets.
To support customers in China and the Asia-Pacific region, we opened a new biologics manufacturing facility in Hangzhou, China, which provides integrated clinical and commercial drug substance and drug product capabilities. We also opened a new Bioprocess Supply Center in Incheon, South Korea, to provide customers with key materials for production of their biopharmaceuticals, while also expanding our clinical trial services there.
Our scale and expanding capabilities in these regions will create growth opportunities for us well into the future.
Creating value for our customers
Our third pillar is delivering a unique value proposition for our customers, and we continue to strengthen our capabilities to serve them.
During 2022, we executed on the accelerated investments we've made over the last three years, bringing new capacity online for pharma services, bioproduction and clinical research services.
In pharma services, we opened a manufacturing facility in Plainville, Massachusetts, for the development, testing and production of viral vectors used in cell and gene therapies. In bioproduction, we brought new capacity online in Lebanon, Tennessee, and Millersburg, Pennsylvania, for single-use technologies used in the production of biologic drugs. We added cell-culture manufacturing capacity in Grand Island, New York, and opened a facility in Chelmsford, Massachusetts, where we'll make resin beads used in the production of vaccines and breakthrough treatments for rheumatoid arthritis, multiple sclerosis, asthma and other diseases.
We also integrated new capabilities that we've added through M&A, including recombinant proteins to complement our biosciences offering from the acquisition of PeproTech, which we completed at the close of 2021.
Advancing promising new drugs
Our acquisition of leading clinical research organization PPD, Inc. in 2021 has enabled us to partner with pharma, biotech and government customers in new and exciting ways – helping them to move a scientific idea to an approved medicine quickly, reliably and cost effectively. One way we do this is by helping our customers manage the vast amount of information from clinical trials so the health outcomes and efficacy of a drug candidate can be understood – a key challenge in drug development. In fact, the National Cancer Institute has chosen us to provide support services and digital solutions for collection of electronic patient-reported outcomes and health data for oncology and hematology studies. Ultimately, this work will help to bring life-changing therapies to patients.
In addition, our integration of PPD, which we acquired in 2021, has been very successful and is largely complete. PPD forms our clinical research business and is performing extremely well as our customers realize the benefits of our combined offering to help them bring new drugs and therapies to patients. We are winning significant new business in clinical research services and have raised our revenue synergy expectations for the business.
Given the strong growth outlook, during the year we opened a new state-of-the-art bioanalytical lab at our clinical research campus in Richmond, Virginia, to support increasing demand for analytical services to accelerate drug development.
As always, our Practical Process Improvement (PPI) Business System and our Mission-driven culture were major factors in our success. In a year marked by global supply-chain disruptions, a war in Ukraine, COVID-19 lockdowns in China and inflationary headwinds, PPI enabled us to engage and empower our colleagues around the world to find a better way every day to overcome challenges, improve processes and work more efficiently and effectively. This had a significant impact on our ability to meet our customers' needs, maximize return on investments, drive growth and fulfill our Mission – enabling us to deliver differentiated performance for our stakeholders.
Making a positive impact on society
As a Mission-driven company, we help to make the world a better place by enabling our customers' success. We also make a difference by supporting our communities and being a good steward of our planet, and I'm proud of the actions we took in 2022.
During the year, we continued to advance our environmental sustainability roadmap, reducing our carbon footprint and finalizing significant power purchasing agreements to accelerate our transition toward 100% renewable energy. We also increased our 2030 greenhouse gas emissions reduction target for our operations to achieve a 50% reduction in this decade.
Through our Foundation for Science, we supported students across the globe with our STEM education programs, including becoming the title sponsor of the Thermo Fisher Scientific Junior Innovators Challenge, the premier middle school STEM competition in the United States.
I also want to thank our local colleague-led Community Action Councils and all of our team members who collectively volunteered more than 120,000 hours during 2022 to advance STEM education and support their communities.
Uncovering clues about our changing climate
As greenhouse gas levels continue to rise, our planet is warming, sea levels are rising and polar ice mass is shrinking – with alarming implications for humanity. To better understand our future, we need to learn more about past environmental events and how our climate has changed over time. That's why Thermo Fisher is supporting the global Ice Memory initiative, led by Fondation Université Grenoble Alpes. Through this initiative, scientists are extracting ice cores from mountain glaciers and using our mass spectrometry and chromatography instruments to analyze the samples, providing clues about our climate and environment that lie in ancient ice.
Enhancing our vibrant culture
We accomplished so much in 2022, and none of it would be possible without the passion and commitment of our incredible global team. That's why we continue to build a vibrant and inclusive culture, where our colleagues are inspired to bring their best every day and know they can achieve their career aspirations within our company.
Throughout the year, Thermo Fisher was recognized for our industry leadership and our inclusive culture. We earned a 100% score on the Human Rights Campaign's 2022 Corporate Equality Index for LGBTQ equality for the seventh consecutive year and advanced on Fortune's list of the World's Most Admired Companies. We were also recognized by Forbes magazine as one of the World's Top Female-Friendly Companies and one of America's Best Employers for Veterans.
This is an ongoing journey, and we'll continually strive to make Thermo Fisher the best place for our colleagues to have a Mission-driven career.
Looking ahead
In so many ways, 2022 was another special year for our company, and I'm very excited about what lies before us.
Thermo Fisher is uniquely positioned to help our customers navigate the year ahead. We have an experienced management team leading the most talented colleagues in the industry, the power of our PPI Business System to make us even stronger, and a profound Mission that fuels our success.
On behalf of our global team, thank you once again for your support of Thermo Fisher Scientific. I look forward to what we will accomplish together in 2023 and beyond.
Sincerely,
Marc N. Casper
Chairman, President and Chief Executive Officer
April 7, 2023
Read the original letter here.
