Thermo Fisher Scientific Inc. (TMO) Earnings Call Transcript & Summary

Okay. Good afternoon. We're going to kick it off. I'm Tycho Peterson from the life science team. It's my pleasure to introduce our next company this afternoon, Thermo Fisher Scientific. If people have questions, there's a submit question function on the website. And with that, I'll turn it over to Marc.

Tycho, thank you for having me. Happy New Year, and it is great to be back at the annual JPMorgan healthcare conference. I wish that we're all together in San Francisco, and I look forward to that happening in the not-that-distant future. I look forward to giving you update. I'm going to go through a presentation, and then I know we're going to have a Q&A session moderated by Tycho. So I'm going to turn to Slide 2, starting with the safe harbor statement and the use of non-GAAP financial measures, and if you can read that, which is up on the slide, just reminding about no obligation to update the information going forward. And then we have the reconciliation of the GAAP to the non-GAAP financials in the Investor section of thermofisher.com for those reconciliations. So I thought it would be helpful to just start with the key takeaways from the presentation right up front, and then we'll get into the details. So as in years past, we executed our growth strategy in 2020. We strengthened our position in -- as a world leader in serving science and really focused on making sure we achieve the objectives that we set out to achieve. Very quickly, the year changed, obviously, and we wound up playing an extraordinary role in supporting the global pandemic response, and we did that in a number of ways, and I'll highlight that in some of my remarks today. But we supported COVID-19 testing around the world, and we played a huge role in enabling the development and production of both therapies and vaccines. The combination of executing our strategy, making progress on our key initiatives and the extraordinary role that we played in the response to the pandemic has resulted in our strongest year outperformance in our history. We preannounced today, before the market opened, that we expect our Q4 revenues to grow approximately 50%, and that would result in 25% organic growth for the full year of 2020. While delivering the extraordinary performance and the very strong pull-through on earnings that went with that growth, we took a meaningful number of actions to brighten the already bright future that we had as we entered 2020. Our focus was to strengthen our competitive position and ensure that, over time, we're able to accelerate our growth from that normal range of 5% to 7% organic growth, where we entered the year with, to, in the future, being able to grow even faster than that. We are exceptionally well positioned as we entered 2021. Our base business performance is strengthening, and we had a significant role in the response, which is driving very significant revenue generation. So that's the takeaways from the presentation. What I thought I would do, as we get into the details, is start to orient all of you about Thermo Fisher today. And on Page 4, we're the world leader in serving science. Incredibly strong brands, well respected by our customers, $30 billion in revenue, 80,000 phenomenal colleagues, and we invest over $1 billion in R&D a year to make sure we have the best products. Our customers know us for our industry-leading scale and our unmatched depth of capabilities, and all of that is powered by our practical process improvement business system, which continues to strengthen Thermo Fisher's outlook. Our mission is the purpose of the company, which is we enable our customers to make the world healthier, cleaner and safer, and we were in the spotlight in 2020. From a healthier perspective, we were called on to enable the global response. We scaled the global gold standard PCR tests. We played a huge role in development and production of vaccines. I'll get into that. And we're on the front lines of fighting COVID-19. But it wasn't just about COVID. Our technologies are used to advance green energy, to manage climate change. And ultimately, from a safer perspective, our technologies are used to ensure the quality and safety of medicines that are being made. Really, just the mission enables us to -- enables our customers to have such a huge impact on the world and inspires all of our colleagues to do their very best every day. As a company, we have a very attractive revenue profile. We have strong customer base, with 40%-plus of our revenue serving the pharma and biotech industry, a very attractive recurring mix of revenue. Almost 80% of our revenue is consumables and services. And from a geographic perspective, about 20% of our revenue is in the high growth and emerging markets, which is highlighted on Page 6. Turning to Page 7. The combination of being the world leader in serving science with such deep capabilities, and such good customer mix has contributed to outstanding financial performance over a very long period of time. If you look back over the last decade, updated through the third quarter of 2020, we've averaged 11% growth in revenue, 17% growth in adjusted EPS and 17% growth in free cash flow, just outstanding financial performance based on executing a strategy that has proven to be relevant to our customers and successful in the marketplace. At the JPMorgan conference a year ago, on Page 8, as we've done in years past, we highlight our goals for the upcoming year. And this is what we articulated in January of 2020. Our first objective for the year was to continue our share gain momentum, right, and leverage our growth strategy to be able to continue to progress share gain. And that's around new products, our unique value proposition, how we leverage our commercial reach in the high-growth regions, all proving to drive significant revenue growth. The second aspect of our goals for last year were around our margins and below the line to ensure that we convert that revenue into strong bottom line performance. Capital deployment, an integral part of our strategy and our objectives for a given year, maximize the cash flow generation and deploy it to strengthen the company's outlook and fuel our growth and do so while being very shareholder-friendly in capital deployment through M&A, return of capital, buybacks and dividends. And then ultimately, the final goal was to continue to execute on our environmental, social and governance priorities. So that's what we set out to achieve last year. I'm going to go through the highlights on why 2020 was our best year yet. But by March 1, there was a new goal, which was to enable the global pandemic response. So not only do we have the things that we normally set out to achieve, but we had a much bigger goal to do as well, which is play a real role in responding to COVID-19. So I thought I would highlight last year actually by diving first into our pandemic response. On Page 10, very early in the pandemic, we set out a clear set of guiding principles on how we would manage the company through the pandemic. And our very experienced management team set those principles so that we would be able to navigate and mobilize our team to respond to the pandemic and enable that response around the world. The second thing is we leverage our scale and adaptive capabilities to bring our solutions to our customers' challenges, and we rapidly deployed of the relevant products and services to comprehensively allow our customers to respond to the pandemic. We demonstrated operational agility. We both managed the headwinds and portions of our business while scaling up our response for where our products and services were needed to fight the pandemic. And then all throughout, we stayed very focused on creating an even brighter future for Thermo Fisher Scientific by strengthening our competitive position. So that's how we managed the company in 2020. And when you look at our performance and you think about the impact that we had on Page 11, we played a -- outsized role in the global testing and sample collection response to the pandemic, enabling 20 million-plus tests per week based on our capacity, just a huge ramp-up in capacity to respond to the pandemic. Our research tools and our pharmaceutical manufacturing and development facilities were put to the test. And in fact, we supported over 250 programs in terms of the COVID response, both on the vaccine side and on the therapy side. And then finally, we played a major role in supporting our customers' ability to stay open by procuring and supplying PPE to keep them safe and keep them operational. Over 7,000 customers were served from a safety perspective during the course of the year. So a very comprehensive role. And when you look at that, we were able to do several major things. With agility, we addressed customer bottlenecks. Across the world, there was an acute shortage of global viral transport media. What that's used for is to transport samples from a patient to a laboratory to determine whether somebody had COVID or not. And very quickly, the amount of testing that was going on across all platforms overwhelmed the specimen collection manufacturers. We won scale contracts in the U.S. and in the U.K. to support the demand because of the trusted nature of our relationships that we had and the unique capabilities that we had. We built 2 dedicated facilities to help solve those global shortages. And ultimately, we've permanently strengthened our competitive position in the specimen collection area, really exciting opportunity and acting with agility. From a COVID-19 testing perspective, going into the pandemic, we had a leading installed base of 2 PCR instruments. We very rapidly developed our COVID test kit. Got the EUA in the U.S. for emergency use authorization and the CE-IVD by mid-March, and we exponentially increased capacity to 20 million-plus tests per week while addressing customer shortages in sample preparation. We scaled our sample preparation business, and that combination of PCR and sample prep has allowed us to truly enhance our long-term competitive position in molecular diagnostics by showing our customers how well we can work and how quickly we've scaled across the world. It's been a remarkable year in terms of the impact that we've had in supporting testing around the world. And then finally, from a therapy and vaccine perspective, we partnered with the industry, pharma and biotech, to accelerate therapy and vaccine programs. We have a broad portfolio of best-in-class products and contract development and manufacturing services to support all types of therapies and vaccines, and we've been able to enable that over 250 programs from a bioproduction standpoint, our leading cell culture media, single-use technology; our rapidly growing purification products, all playing a huge role, and our CDMO services supporting all types of medicines and vaccines responding to the pandemic; and also entering into long-term new partnerships with 2 governments, the U.S. government and with Singapore, to expand capacity for the long term. Those set of activities, the therapies and vaccines, will generate over $1 billion of revenue. And longer term, we'll be able to repurpose that capacity because it's totally usable for any other type of biologic or vaccine. And therefore, those investments will allow us to accelerate growth longer term as well. So a really strong response to the pandemic. And as you summarize that, our speed at scale allowed us to quickly mobilize to enable the global societal response in the pandemic. We significantly deepened our relationships with our customers and governments around the world and generated well over $6 billion in COVID-19 response revenue in 2020. So the first of our objectives, a big check mark, and I'm proud of how our team responded under very challenging circumstances to play the role that we did. Turning to our share gain objectives and the first aspect of the strategy. Every year, focused on strong new innovative products, another great year. Whether it was our COVID-related products or our mass spectrometers that we launched at the American Society of Mass Spectrometry, our cell and gene therapy system, a closed system for cell processing, or in electron microscopy, a new imaging filter, enabling new scientific discoveries, or our turnkey next-gen sequencing that we launched at the beginning of 2020 and getting extremely good adoption around the world, really, a super strong year on new product launches, advancing our position to drive share gain. The second element of our growth strategy is our unique customer value proposition. We help our customers accelerate their innovation and enhance their productivity underpinned by our quality. And we have an end-to-end offering to pharma and biotech. We have the leading life sciences offering, and that spans from R&D to bioproduction, all the way through the leading CDMO services. This part of our business is almost $12 billion in revenue, and it has grown, on average, 9% organically over the last decade, extremely strong, resonating value proposition for our customers, and it strengthened in 2020. Here's some of the highlights that were in the public domain, a few highlights. We announced the plan to open up a new plasma DNA plant to support vaccine development. We continue to expand our capabilities around the world to support those programs. Pfizer announced the outsourcing of additional parts of their drug production, and we were mentioned as one of the partners there, INOVIO announcing the partnership with us, and we announcing $180 million investment to expand our viral vector capabilities based here in the U.S., all examples of how our value proposition, which is incredibly strong about enabling our customer success, got even stronger in 2020. The third element of our growth strategy is how we leverage our scale in the high-growth and emerging markets to drive growth and share gain. When you think about our position in the emerging markets, I always say we've done so well there because it's rational for a customer to prefer to do business with Thermo Fisher Scientific. So why is it rational? The benefits of our industry-leading scale allow us to invest in our commercial infrastructure, our e-commerce platforms, our supply chain to create that superior customer experience, and that's allowed us to build a $5.5 billion business that is now over 20% of our total revenues. We had really good highlights during the course of 2020. Here's a couple listed. We announced a new biologics facility in China. We also announced a collaboration with the Singapore government to build a sterile fill/finish facility as well as a large investment in opening up our first single-use technology capabilities in China to support the local biotech industry. Really, when you think about those 3 elements of our growth strategy, innovation, value proposition, high-growth regions, a phenomenal year in terms of performance to drive share gain. From a margin perspective, as you know, we delivered very strong growth in the first 9 months of the year in our margins, in our earnings per share. And our PPI business system on Slide 20 really highlights the benefits of PPI. It enabled our comprehensive COVID-19 response. That focus on finding a better way every day, the continuous improvement culture allowed us to go out and tackle the scaling up that we needed to scale up, the ability to do that profitably, generate significant cash flow. PPI is so ingrained in the company and drives such meaningful impact to our success, and 2020 was our best year yet in that regard. On Slide 21, the year continued to line up very strongly. And turning to capital deployment and looking at the year from a perspective of how we did there on Page 22. A busy year. I'm proud of what the team accomplished. On an M&A front, 3 transactions to strengthen different parts of our business, a large transaction with CSL, a partnership to take over a new state-of-the-art, large volume biologics drug substance facility, a joint venture in China to build a biologics and cell drug manufacturing facility in Hangzhou and adding new capabilities to our biosciences business to strengthen our flow cytometry offering. Because of the great growth opportunities we had, we increased CapEx. That was one of the things that we did last year from a capital deployment standpoint. We increased our run rate, and I'll highlight that on the next slide in a moment, to about $1.5 billion [ borrowers ] of CapEx, and that will allow us to accelerate growth and drive attractive returns. And then like every year, a strong year of return of capital. About $1.8 billion returned in repurchases and an increasing dividend. And for the first 9 months of the year, we lowered our net debt by $1.8 billion. We entered the year with a pristine balance sheet. And from an M&A perspective, we're busy. Our pipeline is very full, very active, and I'm looking forward to continue to progress that pipeline in 2021. Slide 23 gives a little bit of a deeper dive on those capital investments that we've made. In a given year, we would invest about $900 million in CapEx. Last year, about $1.5 billion, and that will expand even further in 2021. And we did that to support our customer needs in the short term as well as for the long term, really, to help scale up to meet the COVID demands, but that capacity will get repurposed longer term to meet many other disease states in terms of what the pharmaceutical and biotech industries need. These investments went to our biosciences business, where we continue to invest in our capacity to expand our manufacturing of enzymes and nucleotides for vaccines, as an example; in bioproduction, at over $2 billion business, where we invested to capitalize on a very substantial growth in biologics and vaccines. And we're supporting the growth of our single-use technologies, our media business as well as our rapidly growing purification business. And in pharma services, a $4.5 billion business, investments come in 3 different types: internal capacity expansions. Sterile fill/finish would be an example. The viral vector facility that I mentioned would be examples. But at the same point in time, we're also acquiring facilities in the pharmaceutical industry and also adding acquisitions that bring new capabilities [indiscernible] a very active year of pulling forward investments that we're on our long-term road map to create an even brighter future for Thermo Fisher Scientific. So a good year of capital deployment. The final aspect of our objectives for the year was around environmental, social and governance priorities. And on Slide 25, you know us as being committed to doing business the right way. It all starts with our mission, to enable our customers to make the world healthier, cleaner and safer. Our products and technologies and services are used to benefit society globally. And we take deliberate actions to ensure that we're addressing sustainability issues for today and for tomorrow as well as making sure that our strategy is aligned with all of our stakeholders'. And we think about that from an operations perspective, how we operate from a colleague perspective, creating a great place to work from a community perspective, giving back and making a difference in our communities, and from an environmental perspective and minimizing our footprint on the world that we live in. So we have a very strong focus here. And 2020 was a special year in terms of the progress that we made. Of course, we stayed true to our focus on reducing greenhouse gas emissions, constantly optimizing processes, building environmental efficiency into the company, sourcing energy in a smart way and a great year in giving back to the communities where we live and work. We launched our foundation for science. We funded it with $30 million to expand our impact with STEM education, especially in the underserved communities. We also extended a collaboration with historically black colleges and universities, creating new educational opportunities by investing $25 million in our COVID-19 testing products for those universities and colleges so that they could have their students back in campus, so that they could carry out their mission in person while also increasing our commitment to hiring from those universities and colleges, really, an exceptional year in terms of performance. So when I think back on 2020, our best year yet, extraordinary performance in the most challenging of times. As we look to our goals on Slide #28, the last slide of the presentation, we're going to build on our outstanding momentum and make '21 an even better year. Our objective is when we're sitting here together, a year from now, hopefully, in San Francisco, we'll say it was our best year yet. And we'll do that with these goals, and they should feel very comfortable and familiar to you. We're going to significantly enable the societal response to the pandemic. We'll be the industry leader in COVID-19 testing. We'll play a leading role in the therapy and vaccine production. We'll create sustainable value from the investments that we initiated in 2020. From our growth strategy, we'll execute our shared need strategies around new product launches, leveraging our unique value proposition and our commercial reach in the high-growth and emerging markets. PPI will enable it all and drive strong profitability. Capital deployment, we expect it to be a busy year and brightening the future for our company, and we'll continue to be friendly with shareholder perspective in this strategy. And then finally, from an environmental, social and governance perspective, we'll execute on our priorities and make '21 another year of high impact. So with that, I'm going to turn it back over to Tycho for the moderated Q&A session. Tycho?

Great. Thanks, Marc, and congrats on a great year. I'm going to start off with just one on the preannouncement. I'm wondering if you can give any more color on base business recovery versus how much came from COVID testing and vaccines.

Yes. So Tycho, we had a very strong finish to the year, and we're obviously getting to all of the details when we have our earnings call on February 1. But we saw a very strong momentum in the COVID response. And as we're expecting -- we expected very good performance from our base business, and that happened as well. So really to have 50% organic growth given the scale of the company in the fourth quarter, really outstanding performance.

I guess looking back at the past year, are there things that make the company different coming out of the pandemic? I mean, it's amazing how quickly you mobilized. You built a business bigger than Agilent on the back of the COVID tailwinds. I did a panel with [ Mark Stephenson ] where he talked about the Amplitude. You basically had to have a start-up company within the company to get this new instrument out. So were there things that enabled you to move so quickly? And are there kind of permanent changes at the corporate level going forward that will allow you to maybe be more nimble on the backlog?

Yes. So Tycho, I couldn't be more grateful to the 80,000 colleagues. They made it happen, right? Organically, they came together. They understood that when the alarm bell rang, that they were going to respond, and they did it in an amazing way. And the PPI business system enabled so much of this in terms of the problem-solving approaches that we use. But we learned a lot about what we call as COVID speed. There's a whole another gear in that transmission when you need it, and we really found it, and we're able to accelerate in a huge way. And there's no going back, right, after COVID, right? We're not going to say, hey, we operated at COVID speed only in COVID, right? We learned a lot. Our objective is to exit this period as a faster-growing company with a strong competitive position. And we made substantial investments last year, right, while still delivering amazing earnings growth, that will create a brighter future for the company, right? We will look to accelerate our share gain, look to grow faster than that 5% to 7% over time that we would expect in a normal year, and I think those things are all very exciting.

Maybe just honing in on some of those investments. You highlighted the expansion of viral vector capabilities. Can you maybe just talk about where we are in VTM and then also refrigeration? I date myself going back to your days running Kendro, but there's been a big dynamic around cold storage for the vaccine. So to what extent are you making investments in that channel as well?

Yes. So it's been an interesting year in many respects, right? One of the things is because of the depth of the relationships we have with our customers, you're able to understand what's on their mind and what they're anticipating and help plan for that. So I'll use an example on cold storage, right? For the Moderna and Pfizer vaccines, you obviously have to have a cold storage infrastructure to support that. When [ operational work speed ] was announced in the middle of 2020, we quickly mobilized our manufacturing teams to make sure that we wouldn't be the bottleneck from a cold storage perspective. We ramped up our capacity, and we've seen very, very robust demand for lab equipment to support around the world the supply chain. So we've been actively engaged there. Viral transport media, that specimen collection for COVID tests, another example, the typical incumbents weren't able to scale up capacity. Huge backorders around the world in March and April. In 6 weeks' time, we broke ground. We built a facility in the United States in Kansas to be able to produce. I think we're producing somewhere in the range of 9 million, 10 million viral transport media tubes a week, a pretty astonishing accomplishment and really alleviate the backorder situation. And that will be repurposed going forward, right? We'll play a bigger outsized role in supporting specimen collection long after COVID-19 is done.

One that came in on e-mail was, is there a way to quantify what all these incremental investments will bring in terms of revenues? If you think about the sterile fill/finish in Singapore and the single-use in China, plasma DNA, is there kind of a way to quantify the incremental contributions from the stepped-up R&D, the CapEx?

Yes, I mean, the way to think about it, Tycho, is those programs really were funded to short-term support the COVID response and long term be repurposed for other needs. And in a way, the COVID -- the investments around COVID will pay for a meaningful portion of them. And it will allow us to accelerate the company's growth. Each program obviously supports a certain amount of revenue, and we'll get into that over time in our annual growth rates as these expansions come online. But you saw how quickly we scaled up last year based on our ability to grow 25%. We'll get real benefits from the investments that we've made.

Early in the pandemic, I think there was a lot of focus on the durability of the testing tailwinds, and then you rolled out Amplitude and had tremendous success on the high throughput front with customers like [indiscernible]. How do you think about that platform going forward? I assume there's a whole menu buildout strategy. And is this kind of the future platform to compete with Roche and Hologic and some of the others in the high throughput setting?

Yes. We'll see how the demand for infectious disease testing goes longer term, right, well beyond COVID, right? And these ultra-high throughput systems, we -- the customers will have invested in them. They'll have amortized them to do the COVID response. And I assume that because we are a low-cost producer of the kits, that it'll be an attractive platform for some customers. And for other customers, the components can be also repurposed, the qPCR instruments, the liquid handling. So you can also say, you know what, I don't need that level of volume of 6,000 tests a day, but I'm going to repurpose the PCR instruments and do it at a lower volume. So customers will have a choice about how they want to operate post pandemic. But I think that's more -- that's not a '21 discussion. That will be down the road.

Another focus area has obviously been about the durability of the vaccine tailwinds. If I look at consensus numbers, there's a pretty big drop-off in 2022 for you and your peers. What do you hear from your partners about how they're thinking about vaccine? Is it one and done? Do we have a booster shot in 3 years? How do you think about kind of the durability of the vaccine tailwinds you're seeing now?

Yes. So I think there's 2 different lenses to it. One is, if you think about how large the world is from a population standpoint, it's going to take a long time to vaccinate around the world. And we play a role in the different types of vaccines. So we expect that we will see meaningful demand well beyond '22 on vaccines, right? That's the first aspect of it. We also don't believe that the pandemic has been -- totally begun. We're still going to have COVID in isolated cases even with vaccination so that, on the therapy side, we would expect that there'd be demand as well. We don't know, and that we as scientists don't know what the immunity profile is and how much the virus will mutate. Is it like the flu that every year you need a new vaccine? Or is it more stable? I think TBD, and we all hope that we won't be needed. But if we are needed, we have the capacity to support it. And when all of this is behind us, whenever that is, that capacity will get repurposed for other medicines.

One that came in on e-mail is about share gains. And maybe kind of setting aside any COVID dynamics, if we look across kind of products or applications or markets, are there particular notable areas in the past year where you've picked up meaningful share?

Yes. The company had a strong year in its base business, right? Our channel business did a really good job of helping customers navigate the pandemic, right? We were quick to be able to support the safety side of what customers needed, and that has served us well. That business has performed very well, and we won a number of new accounts, and I feel good about that. Our instruments business, you really saw momentum pick up in the second half of the year, and I feel good about the performance there, right? We'll have to see how all the different competitors announce in their results. But I feel good about how that stepped up. And the same for China, we saw a real step-up in activity in the second half of the year.

On the instrument side, I mean, AI was the most impacted by the pandemic. How do you think about kind of the recovery? And maybe it's too early to think about budget flush in the fourth quarter numbers you just pre announced. I don't know if you've gone through them all, but anything you would call out from a budget flush standpoint?

No. Obviously, we had an incredibly robust finish to the year, and we're going through our process now to get all of the drivers of it. But obviously, we saw there had to be a good budget flush. It just depends on -- I can't tell you the where is yet, where it came from, but certainly, a strong finish to the year.

And how about the outlook for analytical instruments overall? Do you feel like we're kind of on a recovery path here?

I do, right? And obviously, the guidance, we'll get into more of the details in a few weeks. But the second half strengthened. China strengthened. You saw strong bookings that happened certainly in Q3. And those all are dynamics that bode well for us for the future.

And you launched a subscription model, which you weren't the first. I think Agilent has done something similar, but maybe just talk a little bit about on the instrument side how we think about any implications around revenues or margins, what types of customers may opt for subscription versus capital purchases.

Yes. I think in our industry, just given the nature of it, most customers are going to stay with the capital purchase mode. There will be some for their economic reasons or their business model that they go to subscription, and we wanted to make sure that customers have that opportunity. But largely, it's a capital equipment-type purchase.

How about the capital deployment outlook? We get that question a lot. You do as well. Just curious what you're hearing and seeing in the market today in terms of seller expectations. Are you seeing more out of private equity? Are you seeing more in terms of carve-outs? Just any kind of flavor of what the funnel looks like?

Yes. So we're always looking at things. We're always active. It feels very busy right now, and we're looking at all types of transactions, right, in terms -- oh, obviously, logical center of the plate for a baseball analogy or the middle of the fairway from a golf analogy in terms of the types of transactions. But we're busy. And that's everything from corporate divestitures to privately held companies looking at all different types of businesses.

One area you've been pretty close to is mass spec, and curious as we kind of think about the growth opportunities there. You've got the clinical system. There's more talk of using it in markets like bioprocessing. How do you feel about the outlook for that business and some of these kind of newer end markets that are opening up?

Yes. So we've been a big part of -- in the mass spec business of driving the adoption of mass spectrometry into the QA/QC applications for biologics, right? We've had a public collaboration with Amgen over the years to make that a reality. And our multi-attribute method capabilities have been well adopted by the industry. So our mass spec business, we have a leading market position. It's a high-performing business. We saw momentum really reaccelerate in the second half of the year. So very encouraging as we enter the year. And we had really strong ASMS, right, back in the middle of the year. Our new mass spectrometers are extremely well received. So I think as the funding cycle strengthens this year, we're well positioned to capitalize on that.

You had a partnership along those lines with [indiscernible] this morning and proteomics. I mean, that market is obviously getting a lot more attention. I mean, do you feel like we're kind of at a tipping point here in terms of that market really opening up? And you've obviously got the cryo-EM business that feeds into proteomics as well.

Yes. Tycho, as you know, we have a leading position in serving the proteomics market. And so we're well positioned to capitalize on the growth. And I really think that it's amazing what's going on in terms of discovery there, and we're well positioned to enable it and ultimately to capitalize on the opportunities.

How do you feel about the funding environment? We know what the budget is like for this year. Now that the Senate race is done, do you think we could get a bigger stimulus package for NIH?

Yes. So when I think about the NIH, it's good that we have the funding secured. And I think you have the potential for, down the road, additional programs that will put more funding to respond to the pandemic. And whether it comes out to the NIH or comes in other vehicles, I do think you'll see more stimulus-type activities over time supporting our industry because of the important role that we play in understanding the infectious disease world and how to respond to it. So I'm optimistic about what the funding environment is going to be, not just in the U.S., but around the world.

Maybe one last one. In closing, back to bioprocess and really one on Brammer Bio. You're making some capacity expansions there. Can you just talk about momentum in that business? And should we expect further scale up there on your part?

Yes. Our viral vector business is performing extremely well. It's a very exciting area in terms of drug modality, and we're well positioned. We're investing, and we will continue to invest there. We're well positioned, well respected by our customers, and we have a big pipeline of activity to support the growth. So I'm very bullish about our viral vector business and our pharma services business more broadly. In 2021, we're set up for a very special year.

Great. Well, we're at the top of the session. So, Marc, I want to thank you for taking the time. Enjoy the rest of the conference, and we'll talk to you soon.

Thank you, Tycho.

Take care.