- Instruments maker Thermo Fisher is predicting COVID-19 testing could add between $400 million and $750 million in revenues during the second quarter, but said Wednesday that benefit is likely to be more than offset by disruptions from COVID-19, which could cause overall sales to decline.
- Swiss pharma Roche also disclosed first quarter earnings Wednesday, reporting diagnostic division revenues rose by 5%. But testing declines amid lockdowns in China suggest a larger impact may be ahead now that COVID-19 has affected the U.S. and Europe more severely.
- Roche's results largely mirrored those of Thermo Fisher and its medtech peers, at least as it relates to COVID-19. The timing of the arrival of the new coronavirus in North America and Europe meant those regions faced minimal headwinds in the months from April to June.
The laboratory giant's business units continued along pre-pandemic trajectories from January to March, with life science and lab products divisions growing, analytical instruments contracting and specialty diagnostics flat.
Results were "largely in line with pre-COVID-19 expectations," Cowen analysts wrote in a note to clients. Last month, the analysts cut their forecast for the first quarter by 14%. In actuality, total sales almost hit the original estimate, leading the analysts to express confidence Thermo Fisher "is well-positioned to weather COVID-19 headwinds."
But effects of COVID-19 will have a greater impact over time. Thermo Fisher sales in China fell 25% in the quarter, contributing to a 6% headwind tied to COVID-19. The company's Europe and North America units only started to see disruption from the pandemic very late in March. In its current worst-case scenario, Thermo Fisher expects it could face a net headwind to growth of 25% during the second quarter.
The breadth of Thermo Fisher's portfolio means COVID-19 is also creating opportunities. Depending on the level of COVID-19 testing, Thermo Fisher thinks the pandemic could add between $400 million and $750 million in revenues during the second quarter.
As for Roche, North American sales rose 12% in the recent quarter, buoyed by rising demand for molecular testing. However, the situation in China suggests Roche's Western units are unlikely to escape unscathed. In the first quarter, sales of Roche's diagnostics fell 11% in Asia Pacific having been "strongly impacted by the COVID-19 pandemic shutdown in China." Roche said routine testing fell in the quarter.
Similar to Thermo Fisher, Roche has been responding to the pandemic with new testing offerings. In recent weeks, Roche secured an emergency authorization from the Food and Drug Administration for a coronavirus test, and outlined plans to produce many millions of SARS-CoV-2 antibody tests by June.
Demand for the COVID-19 tests could offset falling use of routine diagnostics. Roche on Wednesday confirmed its 2020 outlook.