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CSL share price on watch after Thermo Fisher deal

The CSL Limited (ASX: CSL) share price had a rare off day on Wednesday.

The biotherapeutics company’s shares finished the day 6% lower at $288.00.

Shareholders will no doubt be hoping for better on Thursday. Especially after the release of an announcement after the market close yesterday.

What did CSL announce?

According to its announcement, CSL has entered into a long term strategic partnership with the world leader in serving science, Thermo Fisher Scientific.

This partnership is for the lease of CSL’s state of the art biotech manufacturing facility, which is currently under construction in Lengnau, Switzerland.

The company made the move following a strategic review to determine a pathway that would fully optimise the capabilities of the facility once construction is completed next year.

How will CSL benefit?

Thermo Fisher will lease and operate the facility and is responsible for providing production to support CSL’s biologics portfolio. It will also provide other contract manufacturing services such as packaging and fill-and-finish for a number of CSL products.

CSL Chief Operating Officer Paul McKenzie commented: “As part of the strategic review, we are in the process of transforming our end-to-end supply chain with a view to ensuring the company’s global manufacturing network is operating at a best-in-class level. This includes balancing internal investment with access to capabilities and capacities that are available with an experienced partner.”

“CSL will now be able to access a wide range of capabilities provided by a leading pharma services provider, and we are confident that the management of the facility and the team will be in the very best of hands,” he added.

This isn’t the first time the two parties have worked together.

For some time now, Thermo Fisher has been a key provider of third-party services to CSL. This includes fill-and-finish, cell culture growth media, single-use technologies, and laboratory instruments and supplies.

There was no update in relation to its guidance for FY 2020. I would interpret this to mean the company remains on track to achieve it. Management has previously guided to a profit of ~US$2,110 million to US$2,170 million this year.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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