Danaher's Biotechnology Growth Picks Up: A Sign of More Upside?

Danaher Corporation’s DHR Biotechnology segment continues to play an important role in its overall growth. In the second quarter of 2025, the segment’s core revenues rose 6% on a year-over-year basis, fueled by sustained momentum in the bioprocessing business.

An increase in demand for consumables from large pharmaceutical customers in Western Europe has been aiding the bioprocessing business. Also, solid demand from pharmaceutical customers for monoclonal antibodies (mAbs) augurs well for the business. It is worth noting that, in the second quarter, orders in the bioprocessing business increased for the eighth consecutive quarter. For 2025, DHR anticipates core revenues from the bioprocessing business to increase in high single digits on a year-over-year basis.

However, weakness in the discovery and medical business due to reduced demand for equipment in the life science research end markets is concerning for the Biotechnology segment. Core sales from the discovery and medical business decreased in the low single digits in the second quarter.

Overall, while near-term softness in the discovery and medical business poses a headwind, the recurring demand for products in the bioprocessing business provides a solid foundation for future growth. With approximately 7% year-over-year core revenue increase expected in 2025, the Biotechnology segment remains a key pillar of Danaher’s long-term value creation.

Segment Snapshot of DHR's Peers

Among its major peers, CVS Health Corporation’s CVS Health Services segment reported net sales of $46.5 billion in the second quarter of 2025, up 10.2% year over year. CVS Health generated 47% of its total sales from this segment in the quarter. Favorable pharmacy drug mix and brand inflation aided the segment’s results in the second quarter.

Labcorp Holdings Inc.’s LH Biopharma Laboratory Services segment generated net sales of $784.8 million in the second quarter of 2025, up 11% year over year. This was driven by Labcorp’s strong drug development capabilities and scientific expertise. Labcorp derived 22.1% of its total revenues from this segment during the quarter.

DHR's Price Performance, Valuation and Estimates

Shares of Danaher have declined 29.3% in the past year against the industry’s growth of 9.7%.

From a valuation standpoint, DHR is trading at a forward price-to-earnings ratio of 23.13X, above the industry’s average of 16.37X.

The Zacks Consensus Estimate for DHR’s 2025 earnings has been on the rise over the past 60 days.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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