Businessmodel of Thermo Fisher Scientific

Customer Segments

Thermo Fisher Scientific has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at the following end markets: Pharma & Biotech (accounted for 31% of business in 2015); Diagnostics & Healthcare (25%); Academic & Government (25%); and Industrial & Applied (19%).

Value Proposition

Thermo Fisher Scientific offers three primary value propositions: accessibility, cost reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It has been able to do so in part due to its many acquisitions. For example, in the past three years alone it has purchased FEI, Affymetrix, Alfa Aesar, Advanced Scientifics, and Life Technologies. This strategy has enabled it to diversify its capabilities and expand its portfolio.

The company reduces cost by providing many deals. It maintains a “Promotions” section on its website that provides free samples, free product offers, and sizable discounts as high as 50% off.

The company has established a strong brand due to its success. It is one of the top firms in the genetic testing and precision lab equipment markets. It has 51,000 employees in 50 countries and generates annual revenues of $17 billion. It offers five prominent brands: Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific, and Unity Lab Services. Lastly, it serves more than 400,000 customers around the world.

Channels

Thermo Fisher Scientific’s main channel is its direct sales force. It also sells its offerings through third party distributors, catalogs, and its website. The company promotes its offering through its website, social media pages, and participation in seminars, workshops, trade shows, and conferences.

Customer Relationships

Thermo Fisher Scientific’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website provides a number of self-help resources, including product selection guides and tools, product documentation (technical manuals, safety data sheets), videos, webinars, and answers to frequently asked questions.

Despite this orientation, there is a personal assistance component, as follows:

• Training Services – The company operates Customer Training Centers throughout the world at which customers can take Application Training Courses. These classes offer enhanced knowledge of applications and instrument operation, and provide computer-based interactive training, hands-on lab experience, and the opportunity to collaborate with application scientists.
• Support Services – The company provides a variety of customer support services, including instrument services (maintenance plans as well as compliance, validation, and calibration services), custom services (one-on-one help), licensing and commercial supply services, enterprise services, financial and leasing services, and enterprise-level lab informatics services. ### Key Activities

Thermo Fisher Scientific’s business model entails designing, developing, and manufacturing its products and delivering its services for customers.

Key Partners

Thermo Fisher Scientific’s key partners are the suppliers that provide it with the raw materials it needs to manufacture its products. The company also relies on the following:

• Third-party distributors to assist in the sale of its products
• Entities that work with its business development and licensing team to develop and market commercial IP, technology, and new products; partners include companies and universities
• Companies that license its technology in order to develop their own products and services ### Key Resources

Thermo Fisher Scientific’s main resources are its human resources, who include over 4,600 scientists and engineers that design, develop, and/or manufacture its products, and over 16,600 customer service workers.

It maintains important physical resources in the form of its global manufacturing facilities. Lastly, it places a high priority on its intellectual property, with over 4,000 patents.

Cost Structure

Thermo Fisher Scientific has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of product revenues, a variable expense. Other major drivers are in the areas of cost of service revenues, sales/marketing, R&D, and administration.

Revenue Streams

Thermo Fisher Scientific has two revenue streams: revenues it generates from the sale of its products and revenues it obtains from the sale of services to its customers.