1
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
2
Outline of Presentation
• About Thermo Fisher Scientific
• Innovation in Product Development
• Applying Innovation across the Company
• Community Involvement and Innovation
• Summary
3
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
4
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%
5
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
6
Focused on What’s Most Important
7
We enable our customers to make the worldhealthier, cleaner and safer
A Mission We’re Proud Of
8
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
9
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
10
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
11
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
12
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
”
“
Data
LC-MS/MS
13
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
14
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
15
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
16
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
17
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”
18
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
19
Thermo Fisher Foundation for Science
20
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
21
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
22
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
23
Questions