Thermo Fisher Scientific Inc (TMO.N), a medical device company, announced on Thursday, that it would pay $17.4 billion to acquire contract researcher PPD Inc (PPD.O), bolstering its pharmaceutical services division.
The world’s largest manufacturer of scientific instruments, Thermo Fisher, will pay $47.50 a share, a 24 % premium over its trading price of $38.36 on Tuesday before the deal was announced. Thermo Fisher’s stock closed at $494.38 on Thursday, while PPD’s stock closed at $45.80.
With the acquisitions of gene and cell therapy producer Brammer Bio and Patheon, a Dutch manufacturer of clinical trial drugs over the past few years, Thermo Fisher has doubled down on improving its pharma service market, which provides the raw material for new therapies and clinical trial services.
The PPD transaction is projected to boost Thermo Fisher’s adjusted earnings per share by $1.40 in the first year after it closes, which is expected by the end of 2021, according to the company. PPD, which went public last year, provides preclinical consultancy, design, and execution of clinical trials to companies, in the drug development process.
Moderna Inc (MRNA.O) has hired it to manage its COVID-19 clinical trial sites.
According to Cowen analyst Doug Schenkel, the agreement could help PPD gain further work as the COVID-19 pandemic has increased the need for key suppliers for drugmakers. Many pharma and biotech companies now use Thermo Fisher to manufacture drug ingredients.
Contract research companies have seen a revival in demand as drugmakers and governments invest in newer drugs, after being affected last year when clinical trials were interrupted due to the pandemic. In an interview with Reuters, Thermo Fisher Chief Executive Officer Marc Casper said, “There is an immense backlog inside PPD’s book of business on all of those regular trials that are coming back online that were somehow impacted by the pandemic.”
“The funding climate [for clinical research] is very high around the world, and the business growth here is very healthy, and we’re super well-positioned to capitalise on it,” he said. (Manojna Maddipatla, Manas Mishra, and Mrinalika Roy in Bengaluru; Bernard Orr, Sherry Jacob-Phillips, Shinjini Ganguli, and Dan Grebler in New York; Bernard Orr, Sherry Jacob-Phillips, Shinjini Ganguli, and Dan Grebler in New York).
