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Thermo Fisher to acquire PPD in $17 billion deal

pharmafile | April 16, 2021 | News story | Medical Communications thermo fisher 

Medical device maker Thermo Fisher Scientific announced it would acquire contract research organisation PPD Inc for $17.4 billion, as it looks to expand its clinical research service offerings to pharmaceutical and biotech companies.

Thermo Fisher is the world’s largest producer of scientific instruments and will pay $47.50 per share – a premium of 24% above its $38.36 closing price on Tuesday, before news of the deal was first reported.

The PPD deal is expected to add $1.40 to Thermo Fisher’s adjusted earnings per share in the first 12 months after its close, expected by the end of 2021, Thermo Fisher have stated.

Over the last few years Thermo Fisher has been boosting its pharma services business, this includes the acquisition of gene and cell therapy maker Brammer Bio and Patheon, a Dutch manufacturer of drugs for clinical trials.

The Patheon division of Thermo Fisher is a proponent of the ‘one stop shop’ proposal. Meaning this would allow the company to benefit from all its manufacturing needs being supplied by the same service provider, rather than hiring separate contract manufacturing organisations for APIs, dose, or packaging manufacturing.

Peter Shapiro, Senior Director of Drugs and Business Fundamentals at GlobalData, said: “While this acquisition has yet to be approved by regulators, Thermo was the most successful contract manufacturing organisation (CMO) in manufacturing innovative drugs that were approved in 2020 and has recently benefited from COVID-19 vaccine and therapeutic manufacturing.”

PPD went public last year and helps companies in the drug development process, through preclinical consulting, designing, and conducting clinical trials. PPD was hired by Moderna to oversee its COVID-19 trial sites, and the deal with Thermo Fisher should also help PPD win more work, as the COVID-19 pandemic has heightened the need for key suppliers for drug manufacturers.

Thermo Fisher CEO, Marc Casper, said: “In 2020, this [pandemic] led to $500 million in COVID-19 vaccine therapy revenue, and we expect that to increase to $1 billion in 2021. Our comprehensive response to the pandemic demonstrates the unique capabilities of Thermo Fisher Scientific.

“This acquisition allows Thermo to expand its one stop shop to running clinical trials. This acquisition is the converse to a recent acquisition by prominent CRO, Charles River Laboratories, of Cognate BioServices, a prominent cell and gene therapy CMO, which helps Charles River to create an ‘end-to-end solution’ for cell and gene therapies.” 

In 2020, PPD brought in $4.7 billion in revenue and has more than 26,000 employees spread over 47 countries. Meanwhile, Thermo Fisher had $32 billion in revenue last year and employs more than 80,000 people. Thermo Fisher expects the deal to immediately boost adjusted earnings per share, and estimates it will result in about $125 million worth of savings by the third year.

This deal announcement comes shortly after a failed attempt by Thermo Fisher to acquire molecular diagnostics company Qiagen. After initially offering $11.5 billion for the company and then raising its bid further, Thermo Fisher was still unable to persuade Qiagen stockholders to tender their shares.

Thermo Fisher expects its client rolodex to open new doors for PPD’s pharmaceutical services, helping the combined company win a larger slice of the $50 billion clinical research market.

Kat Jenkins 

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