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The world leader in serving science

Mitchell KennedyVice President & General ManagerMolecular Biology Business Unit

May 8th, 2014

Innovation in Thermo Fisher Scientific, a Core Value of the Company

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Outline of Presentation

• About Thermo Fisher Scientific

• Innovation in Product Development

• Applying Innovation across the Company

• Community Involvement and Innovation

• Summary

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Premier Brands

Global Scale

• 50,000 employees in 50 countries

• $17 billion in annual revenues

• Unparalleled commercial reach

• 10,000 employees working with

customers every day

The World Leader in Serving Science

Unmatched Depth

• Innovative technologies

• Applications expertise

• Lab productivity partner

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ProductsPortfolio** Geographies

Pro forma revenues: $16.8B*

* Estimates based on unaudited FY 2013 revenues of both companies**Percentages calculated are based on estimates for intercompany eliminations and other accounting policy adjustments

Our Scale and Depth of Capabilities

Analytical Instruments

18%Specialty Diagnostics

19%

Lab Products & Services

37%

LifeSciences Solutions

26%

Instruments & Equipment

26%Consumables

61%

Services13%

Europe27%

North America

51%

Asia-Pacific18%

ROW 4%

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Vilnius Biosciences Center of Excellence

• Part of Thermo Fisher since 2010

• Molecular and Protein Biology products for life science research and diagnostics

• 430 employees

• 80% with university degree, 10% Ph.D.

• R&D Center: 90 dedicated researchers

• All products are manufactured in Class D clean-room facilities

• ISO 9001, ISO 14001, ISO 13485

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Focused on What’s Most Important

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We enable our customers to make the worldhealthier, cleaner and safer

A Mission We’re Proud Of

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Together We are Fulfilling Our Mission

Stopping counterfeit drugsKeeping the public safe from radioactivity

Helping to reduce air pollution

Identifying peanut allergies

Improving breast cancer diagnosticsScreening for E.Coli

Ensuring our drinking water is clean

Advancing justice through forensic science

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Accelerating Customer Results

• Scientific instruments and equipment• LIMS and laboratory software• Process monitoring and industrial

instruments• Environmental monitoring and safety

• Transplant diagnostics• Clinical assays• Immunodiagnostics• Microbiology• Anatomical pathology00

• Laboratory equipment• Laboratory plasticware

glassware and supplies

Solving Analytical Challenges

Increasing Lab Productivity

Improving Patient Diagnostics

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Leading Life Sciences Technologies

• Molecular biology• Cell biology• Protein analysis• Genetic analysis

• Human identification• Synthetic biology• Food safety• Animal health• Bioproduction

• Molecular diagnostics• Genomic medicine• Regenerative medicine

Accelerating Scientific Discovery

Applying Biology Beyond Research

Advancing Personalized Medicine

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Portable, Affordable and Easy to Use

• Accessible to chemistry students and technicians with limited NMR experience

• Mobility – shareable across multiple laboratories

• Low cost (at least 10X less expensive than high-field NMR)

• Shoe-box size and 10lbs/5Kgs

The World’s First Miniature NMR Spectrometer

Thermo ScientificpicoSpin 45

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Q Exactive Advancing Life Science Research

Prep

Microorganism ID

Bacteriapopulation

Protein ID

…using the new methodology with the Q Exactive, we are already seeing that within an hour or so, instead of several days, we can start getting a full spectrum. This will have amajor impact on disease…

Professor Haroun N. ShahUK Health Protection Agency

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Data

LC-MS/MS

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Ion Proton sequencer Genomics market

Unrivaled Industry Leadership

R&D spend equals ~6.5% of manufacturing revenue, >$700M

NX70 Cryostar (cryotomy applications)Cancer Diagnostics

SureTect PCR Food Testing

Orbitrap Fusion Tribrid Mass Spectrometer Proteomics market

Committed to Industry Leadership

Committed to Innovation

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QualityConsistently deliver world-class products and services

ProductivityImprove operating and process

efficiency to strengthen our competitive advantage

CustomerAllegianceExceed expectations to maximize customer success

Our PPI Business System is Our Discipline

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March Global Kaizen Week

Summary of Events & Results

Number of Events Conducted 25

Participants 215

Sites 14

Customer Allegiance: Reduction in # of Complaints 109

Lead Time Reductions (specific sites) 72-99%

Footprint / Space created for growth 1,366 sq. t

Quality: Warranty/Scrap Reductions (annualized) $125,000

Efficiency Savings (annualized) $475,000

Total Hard Savings (Quality+ Efficiency) $600,000

Targeted Achieved250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

$450,000

$600,000

Total Hard Savings Annualized

Targeted Addressed40

50

60

70

80

90

100

110

120

70

109

Customer Allegiance: Reduction in Complaints

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Kaizen Events across Life Sciences Group

Site Kaizen Scope Targeted Benefits

1 Auckland NZ

Reduce Freight Loading Cycle Time 50% Reduction (from 3 to 1.5 Hrs)

2 Austin, TX Process Validation – Std. Process Quality Audit Findings from 4 to 2/yr

3 Bedford, MA Streamlining Order Fulfillment On-time shipments and reduced inventory

4 Carlsbad, CA

Order Planning-Execution alignment On-time shipments from 87 to 90%

5 Carlsbad, CA

Streamlining Marketing Legal Review Tool (event being confirmed)

Cycle time reduction & process efficiency

6 Carlsbad, CA

Operations – Travel Cost Reduction $100k Reduction in Travel Budget

7 Cramlington, UK

Order Quantity Accuracy Reduction in process DT and Qty. Errors

8 Eugene, OR Sample-Retention Optimization Reduction in materials of $61 K (hard savings) and 80% reduction in footprint

9 Grand Island, NY

Reduce formulation time variability Improve formulation schedule adherence from 52 to 62%. Reduction in SKU formulation variability and time by 10%

10 Inchinnan, SCT

Needle and Bottle Leakage Reduction Reduction in PRs and process DT

11 Inchinnan, SCT

Sterility process consistency Reduce annual scrap of $50k

12 Logan, UT Improve order visibility through RRP On-time shipments and CAS gains

Site Kaizen Scope Targeted Benefits

13 Logan, UT Tubing Material Supply Optimization Reduce supply costs/excess material

14 Logan, UT Next Generation Component 3P Elimination of defects and customer complaints associated with cable ties

15 Pleasanton,CA

OMS & OA Turn-Around-Time Reduce Turn-around-time by 75%

16 Rockford, IL Optimization of packaging benches 20% Reduction in work hrs (top 15 kits)

17 Rockford, IL Rapid Change Over on CML 50% Reduction in Change Over Time

18 Singapore NCM Disposition Cycle Time Cycle time reductions, FPY from 97 to 98

19 Singapore Freight Optimization $136k/Year in Productivity

20 St. Leon-Rot, DE

Accounts Receivables Process Reduced overdue Accounts Receivables $15,000, complaints 8%

21 Vilnius, LT Kit Cell Design (Cycle time and capacity)

Mfg. Lead Time from 36 hours to <1, freed up 5 people

22 Vilnius, LT Assembly continuous flow improvements

Mfg. Lead Time from 36 hours to <1, freed up 5 people

23 Vilnius, LT Pronova machine optimization Mfg. Lead Time from 36 hours to <1, freed up 5 people

24 Vilnius, LT Kanban - Standard management process

Kanban batch sizes cut 50% to greatly reduce inventory

25 Vilnius, LT Solutions cycle time improvements Mfg. Lead Time from 80+ days to <1 days

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Kaizen Teams, System Changes and Results

PPI Business System Newsletter

Make Connections Create Value Be Determined

Vilnius

• Site conducted 5 PPI Kaizen Events

• Implemented 11 work cells

• New layouts for continuous flow

• Process steps performed in-line (vs. different locations with travel)

• Eliminated an intermediate supermarket (may eliminate a second)

• Added visual management to identify problems “at a glance”

• Standardized/re-tensioned kanban sizing and processes to reduce inventory

Metric Results

Mfg. Lead Time (Assembly) From 36 hours to <1 Hour

Mfg. Lead Time (Buffers & Solutions) From 89 Days to <1 Day

Productivity/Capacity Freed up 5 people

Footprint Generation 30-40% opened up (~136 Sq. M)

Kanban Batch Sizes Cut in half (significant inv. reduction)

PPI Business System Newsletter

Make Connections Create Value Be Determined

RockfordOptimal Kit Packaging Bench

• Designed and prototyped/tested an improved ergo bench

•Bench will accommodate 1 to 6 pack employees

•U-shape cell design with flow through materials

• Convert from “count 25” method to “counting boxes” method

ResultsSave 400+ hours/year in labor ($8800/year)

Reduce kit packaging time by 20% by eliminating counting

Improved ergonomics

Neutral or positive to quality

FROM TO

Bench

“Basic Table”

“Ergo Flow U-Shaped Cell”

Method

“Count 25”

“Counting Boxes”

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Live Our 4i Values Every Day

Honor commitments, communicate openly and demonstrate the highest ethical standards

Create value by transforming knowledge and ideas into differentiated products and services for our customers

Integrity

Innovation

Be determined to deliver results with speed, excellence and a passion to succeed

Make connections to work as one global team, embracing unique perspectives and treating others with dignity and respect

Intensity

Involvement

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Thermo Fisher Foundation for Science

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Students and teachers conduct novel research while enjoying wonders of weightlessness as part of NASA-HUNCH program

Employees went to Yinjing, delivered donation valued >54k Yuan to 86 students in the "Thermo Fisher 1 on 1 program" and affected by Ya'an earthquake 2013

20 science teachers attended a workshop offered by Fisher Science Education, where they tested and analyzed water samples from the Ohio River in Pittsburgh

Community Involvement and Innovation: Globally

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Community Involvement and Innovation: Lithuania

40% employees volunteered in 2013• Over 3,000 hours volunteered• 28 social projects conducted

Mobile Bioclass, the first country traveling biosciences lab• Promoting science among high school students• 100 schools visited in 70 locations• 2,500 schoolchildren and 150 teachers participated

Collaboration with universities• Participation in development of study programs• Internship program: 33 scholarships for students doing

their final thesis in company’s labs• Employees as part time lecturers

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Summary

• Innovation can be cultivated within an organization through:

• Funding projects and training to drive action

• Managerial support to emphasize value and importance

• Reward novelty and originality

• Avoid excessive criticism of unsuccessful efforts

• Tools such as PPI/Lean (or other disciplines) for a framework

• Goals and objectives which require creativity

• Positive change management imperative for success

• Organization must be willing to adapt and evolve

• Status quo cannot be accepted

• Preconceptions decrease creativity

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Questions