Interview

Scientific investment growth in India, Asia outpaces developed countries

Herb Kenny, Vice President, Global Commercial Operations, Scientific Instruments Division, Thermo Fisher Scientific, speaks to Arshiya Khan on their recent acquisition of Chemito and more about the company

What was the rationale behind Thermo Fisher Scientifics's acquisition of Chemito's analytical technologies business unit and how has this benefited Thermo Fisher Scientific?

There were several reasons behind this strategic acquisition. Thermo Fisher has enjoyed solid global growth over the last few years, and we have opened many new commercial centers of excellence, including Mumbai, India. We are very much interested in the expanding our presence in Indian market and Chemito is our second acquisition here, after our purchase of Qualigens in July 2007. Chemito is the country's largest local supplier of analytical instruments for life sciences and environmental monitoring applications. Thermo Fisher has also purchased Chemito's Environmental Instrumentation division. We are definitely looking for more growth opportunities, both organically and through further possible acquisitions.

The Scientific Instruments Division (SID) has a keen interest in the routine market place for our core chromatography and spectroscopy products, and the acquisition of Chemito's analytical technology division provides us with a tremendous opportunity to do so. Chemito immediately offers SID with a very strong Indian commercial structure that provides us with a far reaching, and professional sales and service organisation. Many Chemito employees bring with them over 20 years of experience and therefore have extraordinary product training and well developed customer relationships. With this expanded channel benefit, SID will be able to immediately add more of our product portfolio directly into their sales organisation.

Previously, Chemito was not able to compete in all of India's growing markets since they had relatively limited product lines to sell. However, additional core SID products will now immediately be added to the Chemito sales channel so they will now also be able to offer products like Ultra Performance Liquid Chromatography (UPLC)/High Performance Liquid Chromatography (HPLC), low cost Fourier Transform Infrared (FTIR), Gas Chromatography (GC)/Mass Spectrometers (MS), high end Atomic Absorption (AA) and GC, and an expanded UV/VIS offering. There is a tremendous opportunity for SID to organically grow our overall business with a greatly expanded distribution channel.

Another advantage SID will gain from this acquisition is a very well run factory with a low cost of manufacturing and excellent engineering capabilities. This factory will be very important as we plan to export these products outside the country. Since SID has a very strong global commercial footprint, it will be very easy to now offer these high performing, lower priced products to the rest of the world. Chemito also provides SID with a mix of excellent, high quality, lower priced products that are truly complimentary to our current product portfolio.

How do you plan to upgrade Chemito's products?

We plan to quickly expand the Chemito GC product line and take it to the next level by coupling it with our MS. In fact, we have already built the first prototype GC/MS system by joining the Chemito Ceres 800 plus GC with the DSQ II single quadrupole mass spectrometer. We also want to quickly expand our GC and GC/MS product portfolio in India. Chemito also manufactures excellent AA and UV-VIS Spectrophotometer systems, and we will be looking to engineer and manufacture more of these types of products in India in the future. We will provide whatever modifications are required to make sure these systems are exportable and more automated in the future.

How is the Indian analytical instruments market different from that of the highly developed countries of EU and US?

Not as much as one would think. More and more companies are now either moving to India or contracting their business through Indian laboratories. There is a lot of ongoing CRO activity in India, as the US and European pharmaceutical companies are looking to save costs on their clinical and bioequivalence studies. We are seeing a strong increase in Indian high-end research and excellent value being provided in high throughput sample analysis. Like many other countries, Indian researchers are also focusing on the analysis of trace impurities in food and beverages, infrastructure, petrochemicals, polymers, environmental analysis, etc. The scientific world is no longer primarily limited only to the US and Europe. In fact, the scientific investment growth rates in India and Asia are far outpacing those of the highly developed countries.

Tell us about competition in the Indian market and Thermo Fisher Scientific's holding in the same?

There has been a 40 percent increase in Thermo Fisher Scientific's overall India business in the last fiscal year. We are competing with global players like Agilent, Waters, Perkin Elmer, Applied Biosystems, Shimadzu, etc. However, we feel SID's overall product portfolio is second to none. We are also investing heavily in consumables, lab equipments and solvents. Thermo Fisher is expanding rapidly and investing heavily in India, and our goal is to be able to serve the entire laboratory with our analytical instrumentation, laboratory equipment, supplies, and consumables. This way, we will be able to focus on and address the customer's entire laboratory workflow.

How has technological advancements revolutionised the life sciences industry and what is Thermo Fisher's contribution in the same?

Thermo Fisher is a global $10 billion company with more than 30,000 employees serving the world of science. One of our major target markets is the Life Science industry where we now have one stop solutions for our customers for sample preparation, sample storage, instruments for analysis, software for data interpretation and networking, consumables, and chemicals. SID continues to innovate in the field of life science mass spectrometry. Our recent exceptionally strong product introductions of the LTQ linear ion trap, the LTQ-Orbitrap family including the new exactive product, and our new, highest sensitivity Quantum Vantage triple quad are all recognised as the top performing products in this marketplace. Our goal is to design innovation and affordability into all our products in order to make our customers more productive and successful in the research.

Tell us about the business model adopted at Thermo Fisher.

Thermo Fisher is organised into three major business groups, namely the Analytical Instruments Group (AIG), Laboratory Products Group (LPG) and the Customer Channels Group (CCG). These businesses are aligned in a way to better service our customers through either innovation or customer convenience. The distribution channels are optimised for either selling our innovative and specialised analytical systems through direct employees or well respected distributors, or allowing customers to conveniently purchase our lab supplies and consumables through our world renowned catalogs.

How has your Indian team integrated into the worldwide business?

Thermo Fisher India now has more than 500 employees serving the three business groups. Our India commercial operations are fully integrated with our global teams and all key corporate business processes (practical process improvement, customer allegiance, sales and inventory planning, etc.) are also implemented here. Thermo Fisher India is headquartered in Mumbai and has regional offices in many other Indian cities. Thermo Fisher has also invested in the Clinical Services business in Ahmedabad by building a new $17 million 100,000 square-foot facility that will employ approximately 100 employees in the first year of operation.

Tell us about your offerings in the environmental space?

Environmental area is growing very fast. Lead, heavy metals and strong product line in India. SID is well positioned in this area as we have a complete line of products Chromatography (LC, GC), Mass Spectrometry (LC/MS, GC/MS, ICP/MS), Molecular Spectroscopy (FTIR, NIR, Raman, UV/VIS) and Trace Elemental (AA, ICP) to meet our customer's requirements. We are especially well positioned in the analysis of heavy metals with our state of the art iCAP ICP-OES, which is currently the top selling product in this global market. Thermo Fisher also has many other world class products to compete in this rapidly growing market. Our environmental analysis instrumentation offers innovative technologies for complying with government regulations and industry safety standards, or responding to a hazardous material situation, including air and water quality monitoring, gas and particulate detection, and elemental analysis.

Can you please tell us about the industry's recent performance and future prospects? Can you spot future trends and developments in this sector?

The CRO sector is growing phenomenally in India. Countries like the US and the UK are now investing heavily in India, and we expect this to continue for many more years. The improvement plans of the India infrastructure (roads, bridges, buildings, etc.) has also led to increased research and quality control spending, especially in the areas of metals and cement. In the biotech sector, proteomics is an area where India is currently lagging behind the US, Europe, Japan etc., but we have seen a recent pick up in Indian interest over the past few years. Our LTQ-Orbitrap is a technological marvel in the field of MS and has provided SID with a very unique market leading position in the proteomics market. Almost every global proteomics guru is utilising this product in their research efforts, and the global sales of this product have far exceeded our expectations. We also see growth in the pharma accounts and in the Indian biochemistry and molecular biology institutes, especially in the areas of proteins, biomarkers, and peptide research. Last but not least, we are expecting tremendous growth in the areas of environmental analysis and food safety. As India increases their food exports, this will be a required investment in order to meet the ever increasing compliance regulations.

arshiya.khan@expressindia.com