Thermo Fisher Scientific (TMO): A Buy as Biopharma Recovery Gains Momentum in 2026

The biopharma sector is emerging from a period of stagnation, with renewed investor confidence and a surge in deal-making activity signaling a cautious but tangible recovery. As the industry navigates macroeconomic shifts and regulatory clarity, companies like Thermo Fisher Scientific (TMO) are leveraging strategic positioning and margin expansion to capitalize on this upturn. With a dominant 15% global market share in life sciences according to insights, Thermo Fisher's embedded presence across the pharmaceutical value chain-from discovery to commercial manufacturing-positions it as a critical player in this evolving landscape.

Strategic Initiatives: Strengthening the Biopharma Ecosystem

Thermo Fisher has aggressively pursued acquisitions and R&D investments to solidify its leadership in biopharma. In September 2025, the company acquired Sanofi's sterile fill-finish and packaging site in Ridgefield, New Jersey, expanding its U.S. manufacturing capabilities and deepening its partnership with a major biopharma player. This move follows the October 2023 acquisition of Olink for $3.1 billion, which bolstered its proteomics capabilities and cemented its role in precision medicine.

The company's $2 billion investment over four years in U.S. operations-$1.5 billion in manufacturing expansion and $500 million in R&D-further underscores its commitment to addressing global demand for biologics. These efforts have yielded cutting-edge tools like the Orbitrap Astral Zoom and Orbitrap Excedion Pro mass spectrometers, accelerating breakthroughs in disease research. Additionally, Thermo Fisher's expansion of bioprocess design centers in Asia in December 2025 aligns with the region's growing biopharma ecosystem, ensuring geographic diversification and long-term growth.

Margin Expansion and Financial Resilience

Thermo Fisher's financial performance in 2025 reflects its ability to capitalize on sector tailwinds. The Laboratory Products & Biopharma Services segment reported $5.97 billion in Q3 2025 revenue, a 4% year-over-year increase, driven by demand for pharma development and manufacturing services. The segment's adjusted operating margin of 14.5% in Q3 2025 marked a 100-basis-point improvement compared to the same period in 2024, highlighting operational efficiency.

On a broader scale, Thermo Fisher's total revenue for Q3 2025 grew 5% to $11.12 billion, with the company raising its full-year 2025 revenue guidance to $44.1–$44.5 billion. Its adjusted operating margin for the quarter was 23.3%, outpacing the 21.9% reported in Q2 2025 according to earnings reports. This margin expansion, coupled with a 10% increase in adjusted EPS to $5.79 per share according to financial reports, demonstrates Thermo Fisher's resilience in a recovering sector.

Alignment with Industry Trends

The biopharma sector's recovery is being driven by macroeconomic factors, including anticipated Federal Reserve interest rate cuts and policy clarity on drug pricing. Thermo Fisher's strategies align with these trends. For instance, its closed-system model-relying on proprietary consumables for recurring revenue- creates high-margin, annuity-like cash flows. This model is particularly advantageous as venture capital shifts toward fewer, high-potential companies with integrated solutions according to market analysis.

Moreover, Thermo Fisher's proactive approach to mitigating the patent cliff-a looming $300 billion revenue risk for pharma companies between 2025 and 2030-is evident in its acquisitions of purification and filtration businesses according to industry reports. These moves enhance its bioproduction capabilities, enabling clients to develop next-generation therapies and extend the lifecycle of existing drugs.

Investment Thesis

Thermo Fisher's strategic positioning and margin expansion make it a compelling buy as the biopharma sector gains momentum in 2026. Its aggressive R&D investments, geographic diversification, and acquisition-driven growth align with industry-wide shifts toward innovation and efficiency. With a 25% year-to-date gain in the S&P Biotechnology Select Industry Index and a valuation that appears undervalued relative to industry benchmarks according to financial analysis, TMO offers a balanced mix of defensive resilience and growth potential.

As the sector navigates the patent cliff and regulatory uncertainties, Thermo Fisher's embedded presence in the pharmaceutical value chain and its ability to deliver end-to-end solutions will likely drive sustained outperformance. For investors seeking exposure to a recovering biopharma market, TMO represents a strategic and financially robust opportunity.