Thermo Fisher Scientific : 2020

Annual Report 2020

The world leader in serving science

Our Mission is to enable

our customers to make the world

healthier, cleaner and safer.

Complementary	15%	35%
Segments	Analytical Instruments	Life Sciences Solutions
	15%	$32.2B
	Specialty Diagnostics
		Revenue

35%

Laboratory Products & Services

Marc N. Casper

Chairman, President and CEO

To our shareholders, customers and colleagues

Without a doubt, 2020 was a year we will never forget. As individuals, as a company and as a global community, we've had to navigate significant challenges and recalibrate our lives in big and small ways to manage through the COVID-19 pandemic. For Thermo Fisher, the year will also stand out as one of our finest moments - for the way we supported science and society when they needed us most.

I'm very proud of how we responded to the pandemic and managed our company successfully through a challenging environment, while also accelerating the execution of our growth strategy to create an even brighter future for our company. As a result, we dramatically increased our growth and created tremendous value for all of our stakeholders. In so many ways, it was our best year yet. I'm deeply grateful to our 80,000 colleagues - some of whom appear on the cover of this annual report - for making it possible.

Track record of outstanding performance

Our 2020 financial results were truly extraordinary, continuing our long track record of outstanding performance. During the year, we grew revenue by 26 percent to $32.22 billion. We also generated exceptional earnings growth. Our GAAP diluted earnings per share (EPS) increased 74 percent to $15.96, and adjusted EPS* grew 58 percent to $19.55. In addition, we generated strong free cash flow of $6.8 billion in 2020.

At the same time, we returned significant capital to our shareholders through $1.8 billion of stock buybacks and a growing dividend.

Our success during the year enabled us to advance our proven growth strategy at a time when many companies had to pull back, and we further strengthened our industry position by:

• Continuing to develop high-impact, innovative new products
• Leveraging our scale in high-growth and emerging markets
• Delivering a unique value proposition to our customers

Commitment to innovation

The first pillar of our growth strategy is innovation, and during 2020 we invested $1.2 billion in R&D to deliver new technologies to help our customers achieve their goals. This included a number of highly innovative products to strengthen our leading positions in analytical instruments, biosciences and bioproduction. For example, we extended our industry- leading Orbitrap platform with two new-generation Thermo Scientific Exploris mass spectrometers. In our electron microscopy business, we launched two Thermo Scientific Selectris imaging filters for our cryo-electron microscopes and introduced our Thermo Scientific Tundra Cryo-Transmission Electron Microscope - continuing to expand the benefits of this groundbreaking technology and democratize its use. Also, in our bioproduction business, we launched a versatile bioprocess container, new cell-culture media, and an oligo resin to support vaccine and therapy development.

Our teams also pivoted to support the pandemic response and moved rapidly to develop our Applied Biosystems TaqPath COVID-19 Combo Kit, which received emergency

• Adjusted EPS is a non-GAAP financial measure that excludes certain items. For a reconciliation of this non-GAAP measure to a comparable GAAP measure, see the accompanying consolidated statement of income on pages 6 and 7 of this annual report.

Annual Report 2020

thermofisher.com

1

use authorization in the U.S. in March 2020, followed by similar authorizations around the world. We then significantly expanded our portfolio of COVID-19 related products, launching the Thermo Fisher Scientific Amplitude Solution for high-throughputPCR-based testing and our Applied Biosystems TaqCheck PCR test for asymptomatic health surveillance. With these innovations, we have established worldwide leadership in COVID-19 diagnostic testing, supporting hundreds of millions of COVID-19 PCR tests across the world.

Leveraging our scale

The second pillar of our growth strategy is leveraging our scale in high-growth and emerging markets. China is our largest market outside the U.S., and to continue to strengthen our presence there and support the rapidly growing local biotech industry, during the year we localized the manufacturing

of single-use bioproduction technologies at our Center of Excellence in Suzhou.

We also announced the formation of a joint venture to establish a biological drug development and manufacturing facility in Hangzhou. In addition, we opened new commercial centers to support materials science customers in China and South Korea. Our ongoing investments and the differentiated customer experience that we've created in the region position us well to further capitalize on the significant growth opportunities there.

Creating value for our customers

Our third pillar is delivering a unique value proposition, and entering 2021, our relationships with customers and governments around the world have never been stronger. Because of these trusted relationships, built over many years,

we were uniquely positioned to help our pharmaceutical and biotech customers develop and eventually produce COVID-19 related vaccines and therapies. And through our extensive work in molecular diagnostics, clinical labs now have an even greater appreciation of our leading offering in specialty diagnostics. We've dramatically increased our PCR and sample preparation instrument installed base, and our customers have seen how strong we are as a partner in addressing their needs.

In 2020, we committed $1.7 billion in capital expenditures to be an even better partner and accelerate our growth. We added capacity and capabilities in bioproduction, pharma services and biosciences, as well as other businesses across the company. We also entered into a strategic partnership with CSL - a global biotech company - to expand our biologics drug substance manufacturing capacity to serve this rapidly growing market.

Driven by our Mission

Our role in addressing the global health crisis is one of the best examples of how we create value for our customers. It's also the most profound example of how we fulfill our Mission to enable our customers to make the world healthier, cleaner and safer.

We were ready for this moment because we built Thermo Fisher to serve society. Thanks to our unique culture, our understanding of science and our close customer relationships, we saw the need and we moved into action with speed at scale. Throughout the pandemic, we've worked closely with the highest levels of governments and healthcare institutions around the world, as well as with the pharmaceutical and biotech industry to support efforts in research, diagnostic testing, development and production

Strong Track Record of Performance

Revenue					Earnings per share
(In billions)					(In dollars)
				$32.22					$19.55
					GAAP EPS			$15.96
					Adjusted EPS*
$18.27					$8.27
					$5.09
2016	2017	2018	2019	2020	2016	2017	2018	2019	2020

* Adjusted EPS is defined on page 1.

2

Annual Report 2020

thermofisher.com

of vaccines and treatments, and personal protection. I'll share a few examples:

Revenue Profile

• When the health crisis first emerged in China, we immediately established round-the-clock service to support the Chinese Centers for Disease Control and Prevention, hospitals and clinical labs, with PCR instruments to detect the virus and our next-generation sequencing instruments to understand it.
• As researchers around the world raced to determine the virus' structure, our Thermo Scientific Krios cryo-electron microscopes helped them identify the spike protein and its cellular receptor during infection - dramatically accelerating the path to vaccines and treatments.
• We also worked closely with our suppliers worldwide to secure and manage the distribution of personal protective equipment to keep healthcare and essential workers and our own colleagues safe.
• Understanding the critical need for reliable diagnostics, we quickly developed a PCR-based workflow that is now widely used across the globe as the gold standard in testing, given its high level of accuracy.
• As an essential partner to help pharmaceutical and biotech companies quickly develop and manufacture vaccines and therapies, we supported more than 300 of the top projects around the world with our pharma services and other capabilities across our company.
• Understanding the requirements of the vaccines, we ramped up production of ultra-low temperature freezers to support storage and distribution well in advance of the vaccine roll-out.

All of this enabled the global response to the pandemic while also creating long-term opportunities for our company.

33%

Diagnostics & Healthcare

13%

Industrial & Applied

18%

Asia-Pacific

3%

Rest of World

21%

Services

21%

Instruments, Equipment & Software

38%

Pharma & Biotech

Markets

16%

Academic & Government

26%

Europe

Regions

53%

North America

Products58%

Consumables

Responding to a global health crisis

The COVID-19 pandemic has upended the world as we know it - a terrible toll in terms of lives lost and impact on businesses, personal life, and just about every aspect of society. Returning to semblance of normalcy depends on continued safety measures, effective diagnostic testing and widespread vaccination. Thermo Fisher has been at the center of the fight since the health crisis began, enabling research of the virus, ensuring the supply of critical personal protective equipment, delivering the gold standard in testing, and supporting development, production and distribution

of vaccines and treatments.	Healthier
Annual Report 2020 thermofisher.com	3