Thermo Fisher Sees Organic Growth Building Toward 4% in 2026 as Biotech Funding Reaches the Lab and Reshoring Adds a Temporary Tailwind
CEO Marc Casper outlines the funding-to-revenue sequence, a 2027-28 reshoring bulge and a more constructive view of China at the Morgan Stanley Global Healthcare Conference, September 15, 2026
Thermo Fisher Scientific CEO Marc Casper used his appearance at Morgan Stanley's 24th Annual Global Healthcare Conference to argue that 2026 is "setting up to be really an outstanding year," supported by improving end markets and strong execution. The company grew organically 5% in the second quarter, its strongest rate since 2021, and EPS rose 13%. Management raised its full-year organic growth outlook to about 4%, from a prior range of 3% to 4%. Casper said the first half grew 3% and the second half should grow about 4%, with the third and fourth quarters broadly similar. He also said orders are running ahead of revenue, and that execution against backlog is the main variable for the back half.
Biotech Funding Is Moving Through the Spending Chain in a Predictable Order
The most useful new framing from the session was Casper's description of how improved biotech funding turns into Thermo Fisher revenue. Pharma and biotech represent about 60% of sales and grew mid-single digits in the second quarter, with each recent quarter a little stronger than the last. Casper said funding began improving through 2025 and stepped up further in 2026, helped by industry M&A and a reopening of the IPO market. The money takes time to arrive. "Usually, when funding happens, it usually takes 2 to 3 quarters depending on the business for that funding to flow."
The sequence begins in clinical research, where he said funded companies spend first because that is how they reach their next milestone. That has shown up in strong authorizations and revenue growth. The second stage is now starting, with companies refilling research pipelines and lifting lab spend, which is visible first in the research and safety market channel (Fisher Scientific). The third stage is high-tech reagents, which Casper expects to strengthen "over the next couple of quarters." For investors, the implication is that the earlier-cycle businesses have already responded while the higher-margin consumables exposure has yet to turn, which supports the case for acceleration into 2027. Casper also said AI is a driver of demand rather than a threat to tools spending, pointing to large-scale lab experiments run to populate foundational biological models, which consume substantial reagent volumes.
Reshoring Is Real but Temporary, With the Peak in 2027-28
Casper gave a notably disciplined view of U.S. onshoring of drug manufacturing, splitting it into three phases. The first is CDMO contracts that let customers meet U.S. production requirements without building plants. Thermo Fisher has secured several large contracts, and President Trump visited its Cincinnati oral solid dose site in March. The second phase is expansion of existing facilities, which brings one-time demand for equipment and lab supplies and is likely to step up in 2027. The third is greenfield construction, where most of the announced dollars sit, and Casper placed its impact in a "'27, '28 type time frame," as customers buy equipment and Thermo Fisher stocks the labs through Fisher Scientific.
He was explicit that the effect is not permanent: "When it's all said and done, we're still producing exact same amount of medicines." He called it a one-time benefit that is additive to the company's growth outlook and "will normalize over time." Pharma Services, particularly sterile fill-finish and to a lesser extent drug substance, is positioned to benefit, and Casper said the company has won contracts in those areas.
China: More Constructive, but Not Needed for the Plan
After his second China trip of the year in August, Casper said he came away "more positive." Thermo Fisher's China business, which had been flat to down, returned to growth in the second quarter. The driver is China's innovative biotech sector, which is investing heavily in R&D and wants Western partners to help de-risk licensing deals. Casper said that when Thermo Fisher's clinical research team runs a trial, "we're putting our brand" behind the data, which he described as valuable to licensing counterparties. He believes China can eventually grow at or above the company average. Academic and government spending in China remains weak and will stay challenged until fiscal policy changes, though he said that "doesn't matter all that much." Management's 3% to 6% outlook and the path to 7% or more in 2028 do not rely on China as a meaningful contributor, so it is an upside lever rather than a requirement.
Academic and Government Stabilizes, but Recovery Is a 2027 Event
Academic and government grew low single digits in the second quarter. Europe was strong, the U.S. turned slightly positive and China remained a headwind. Casper described a market where "funding has been okay, but anxiety has been high," a dynamic he said is almost entirely U.S.-specific and stems from the volume of policy pronouncements in 2025. Chromatography and mass spectrometry adoption supported the quarter. His view is that 2026 is stabilizing but still muted, with a return to real growth in 2027. This is a more tempered stance than on pharma and biotech, and it leaves the segment as a recovery story rather than a current driver.
Industrial and Semiconductor Exposure Is Backed by Orders
Industrial and applied markets, about 15% of revenue, grew mid-single digits in the second quarter with broad strength. Chemical analysis, the smallest of the three instrument businesses, returned to growth on safety and security demand, including radiation and explosive detectors, and on spectroscopy demand tied to high commodity prices. Electron microscopy is the larger contributor, driven by semiconductors. Casper said customers use the technology in next-generation device development, in chiplet work and increasingly in yield ramps, where automation allows near-line testing off the fab floor and speeds the ramp of a new fab. It is a long-cycle business in which "orders are far outstripping revenue," which provides some visibility into future growth.
Bioproduction and Pharma Services: Solventum Filtration Is Accretive but Slightly Dilutive to Segment Growth
Bioproduction has been outgrowing the market, supported by leadership in cell culture media and single-use technologies, including the DynaDrive bioreactor, and by a resins business now benefiting from molecule wins made 5 to 7 years ago. The Solventum purification and filtration business, acquired a year ago, now enters organic growth. Casper expects it to grow mid- to high single digits, which is "a little bit of a drag on the organic growth of bioproduction sort of mathematically, but it's accretive to the company's organic growth." Over time, with pipeline build and added capacity, he expects it to converge with bioproduction growth. He framed long-term bioproduction growth as high single digits to low double digits.
Pharma Services was more modest in the second quarter, as guided in January. Casper said the segment has the best visibility of any Thermo Fisher business, given customer production schedules, and that contracts and shipment timing support a step-up in the second half. He noted that roughly 40% of all experimental medicines are touched by the company's clinical trial packaging, logistics and distribution operations. Capacity additions in sterile fill-finish should support growth in 2027 and 2028.
Clinical Research and Clario Integration
Clinical research authorizations are growing well ahead of revenue, which Casper credited to the Accelerator Drug Development offering, which uses Patheon combinations and AI to shorten development timelines. The $9 billion Clario acquisition closed in March, and Casper called the first six months "great." Clario is a technology platform for clinical trial endpoints with leading positions in three of the four major endpoint categories, and Thermo Fisher's central lab covers the fourth. Casper said the goal is to make Clario the standard platform whether Thermo Fisher, another CRO or a sponsor runs the trial, and to build "a really big business." He gave no financial targets for Clario at the conference.
Capital Deployment and the Longer-Term Algorithm
On capital allocation, Casper said the company remains committed to a strong investment-grade rating and has both financial and managerial capacity for more deals in a fragmented industry. So far this year Thermo Fisher has spent $9 billion on M&A, repurchased $4 billion of stock, raised its dividend 10% and closed the divestiture of its microbiology business in August.
Looking out, Casper reiterated the Investor Day framework of 3% to 6% organic growth over this year and next, with 2026 likely at 4% and orders pointing to further strengthening in 2027, and a return to about 7% in 2028 and beyond. The drivers are stabilizing academic spending and improving biotech funding. China is the upside. The main risk he named was macroeconomic: "If there's something that really throws the economy off track, that would be the thing that could be a headwind." The comments reinforce a view that visibility has improved, though the 2027 acceleration and the 2028 target still rest on the reagent leg of the biotech cycle and a U.S. academic recovery that have not yet arrived.