Thermo Fisher Scientific Inc's chief executive sees China and India as opportunities for enormous growth for the laboratory equipment maker, with revenue from China doubling over the next five years.
"China is a huge growth area, and broader than life sciences, with infrastructure development and environmental," Thermo CEO Marijn Dekkers said at the Reuters Health Summit in New York.
"Right now China sales are about $300 million. We think it can grow for us 15 to 20 percent a year for the next five years, so it can double," Dekkers said.
He said in the first quarter of next year the company will introduce a Fisher catalogue in Chinese for the first time.
"We built a huge demonstration laboratory in Shanghai so customers can come see our equipment and instruments working," Dekkers said.
As China gears up for the 2008 Summer Olympics and the world spotlight, there has been increased demand for instruments that measure air and water quality. But Dekkers expressed concern that those initiatives could stall once the Olympic flame is extinguished.
"There's a lot of focus on air quality, but that might diminish once the Olympics are over," Dekkers said.
The demand for scientific instruments is expected to boom in India, Dekkers said, noting that 25 percent of patients participating in clinical drug testing trials are projected to be coming from India in five years.
He said contract research organizations in India are busy building laboratories to support those trials. "We are helping them equip and furnish those labs," Dekkers said.
Thermo, which reported third quarter revenues of $2.4 billion, just celebrated the first anniversary of its major purchase of Fisher Scientific International. Thermo is again eyeing acquisitions, albeit smaller ones.
"Not something as transformational as a Fisher Scientific right away," Dekkers said, adding that the company was looking for "bolt-on" acquisitions in the $30 million to $200 million range.
"Usually there are 15 to 20 that we are looking at and maybe five, six or seven will happen in a year," he said.
"With these bolt-on acquisitions, if we can pick up $250 million in revenue a year that would be a conservative number," he said. "That helps us spend half of our free cash flow."
While life sciences remains the company's most important business, Dekkers told Reuters television that he sees the overall safety business doubling over the next three years to $400 million, including the likes of homeland security applications and testing for lead paint in toys.
He also expects emerging technology in clinical diagnostics as well as mounting concerns about food safety and climate change to be good for Thermo Fisher.
"A lot more legislation is to be expected on air quality monitoring around the world," Dekkers said.
"Every coal-fired power plant in the United States needs to have an instrument that monitors the mercury that gets put into the atmosphere by January of 2009. They are selling like hot cakes now.
"That for us is about a $100 million opportunity over two years, just that one application in the U.S.," he said. "Globally it could be something like another $300 million."
He said the food safety business could grow 15 to 20 percent a year over the next five years as well.
"You think about all the Taco Bells and Jack In The Box, whose brand is at huge risk because of contaminated spinach or something.
"They are going to want more assurance that the quality of their food supply is good and they're going to do more testing, and all of that increased level of testing is tremendously good for our industry because we provide all of those analytical capabilities."