Pharmaceutical and biotech customers are about 60% of Thermo Fisher Scientific's revenue, and Marc Casper says that end market is now growing faster than the rest of the company.
The obvious worry about artificial intelligence in drug discovery is that simulation replaces laboratory work, and a company selling laboratory instruments and services loses volume. Casper's answer is that better insight into what might work produces more validation work, not less.
"So that insight of what's likely to work actually gets more research being done."
Casper is chairman and chief executive of Thermo Fisher Scientific and says the company holds more data than anyone else in the life-science tools industry. He was speaking at Morgan Stanley's global health care conference, minutes after his own fireside chat there.
The full segment is covered here so you can skip it.
Here are the 4 arguments that matter.
👤 Guest: Marc Casper, Chairman and CEO of Thermo Fisher Scientific
🎙️ Host: David Faber, who anchors CNBC's Squawk on the Street, reporting from Morgan Stanley's 2026 global health care conference
🧩 Other segments: Dan Niles of Niles Investment Management; John Collins, global co-head of M&A at Morgan Stanley; Matt Hougan, CIO of Bitwise Asset Management; and CBOE's Oliver Renick on gold options
📰 Published: 15 September 2026 on the Squawk on the Street feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 4 min
Key Takeaways
AI raises returns on drug development at both ends, and higher returns pull in more investment
It kills ineffective medicines earlier and shortens the time to market for the ones that work
More insight means more validation work, so research volumes go up rather than down
Companies chase more indications per medicine once they know what is likely to work
Pharma and biotech are about 60% of revenue and the fastest-growing end market
The company expects 4% organic growth this year and 4% again in the second half
Casper's answer on a flat share price is that customer outcomes come first and the stock follows
1. AI Raises the Returns
Faber opened on a line from Casper's fireside chat minutes earlier — that artificial intelligence is driving a stronger impact on returns within drug development, and that this is fueling an investment cycle — and asked him to explain it.
The industry's engine is successful medicines, and the return on them sets the pace. "And the higher the returns on those investments, the more virtuous the cycle is." New modalities or therapeutic areas that succeed pull in more investment behind them.
AI works on both halves of that return. "AI is helping to kill ineffective medicines faster so that you don't spend money on things that don't work."
And it lengthens the paying half. Shortening the time to market for the medicines that work gives, in his words, "a longer return cycle on an approved medicine" — which spurs more investment in turn.
2. More Insight, More Work
Faber put the bear case straight to him: if work that used to be done in a laboratory can be done on a computer, customers run fewer experiments and buy fewer Thermo Fisher products.
Casper's answer starts from how hard the biology is. "So when I think about it, in this industry, the human biology is incredibly complicated."
Better insight redirects spending rather than removing it. With more understanding of what you are doing, "you actually do a lot more validation", and the money goes into the number of indications or disease types a medicine is pursued for.
"So that insight of what's likely to work actually gets more research being done. So it really drives really strong growth in the business."
Faber pressed to make him say it plainly — AI means more spending, not less — and Casper confirmed it as the company's view of how this plays out.
The competitive claim attached to it is data. As the industry leader in life-science tools, "we have more data than anybody else", which he says produces unique insights and makes the company more competitive.
3. Funding to Revenue
Faber moved to what Casper had called a funding-to-revenue lag: customer confidence among emerging biotech companies is picking up, funding began improving last year and has stepped up again this year. He asked what the back half looks like against a promise of 4% to 5% organic growth.
The guidance Casper gave is 4%, and 4% again in the second half. "So when we think about this year in aggregate, we expect 4% growth. And we expect to have 4% growth in the second half of the year."
Pharma and biotech will run above that. It is the fastest-growing end market and "It's about 60% of our revenue."
The demand signal is coming from the smaller customers. "We've seen demand really pick up from the biotech companies."
His summary of the position: the cycle is positive, the company continues to grow faster than the competition, and he feels well positioned well into the second half.
4. The Stock That Went Nowhere
Faber's last question was the uncomfortable one. Long-time viewers were used to watching the stock do nothing but rise, and he recalled sitting with Jim Cramer praising the management over many years — but for several years now the shares have been more or less flat. In the second quarter the company beat guidance by $300 million and raised the full-year outlook, and the stock did not move. Was he surprised?
Casper did not engage with the market's reaction directly. The principle he gave instead was that "we're going to get rewarded for our shareholders" if the work for customers is good.
He pointed at the operating result instead. The company has tremendous momentum, visible in organic growth.
And he said the re-rating has started. "the stock has started to appreciate again", with the outlook and continued delivery on commitments behind it.
Bonus Insights
The bear case was put to him twice and he answered it the same way both times — first as fewer experiments, then as less spending — which is how the segment ended on a plain claim rather than a hedge.
Faber's last question named the awkward part out loud, recalling years of praising the management on air against a share price that has gone nowhere, and Casper answered on process rather than on the stock.
The fireside chat happened first. Faber built the whole interview out of phrases Casper had used on stage minutes earlier, quoting them back to him and asking him to expand.
Casper's bottom line is that artificial intelligence is an expansion of the drug-development market rather than a substitution away from laboratory work, because shortening failure and lengthening the return on success both pull more money into research — and Thermo Fisher's own 4% growth this year is being set by the biotech customers who spend it.
Products, Companies & Tools Mentioned
Thermo Fisher Scientific (4% organic growth expected this year and in the second half; pharma and biotech about 60% of revenue and growing faster; more data than anyone else in life-science tools, on Casper's account)
Morgan Stanley (Host of the 2026 global health care conference the interview was recorded at)
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