(Bloomberg) – The $ 17.4 billion acquisition of Thermo Fisher Scientific Inc. of PPD Inc., a provider of clinical and research services to the pharmaceutical and biotechnology industries, is going ‘fast’ to get medicines on the market.
This is the message from Thermo Fisher CEO Marc Casper, in which he sets out the company’s objectives for the agreement. According to a statement on Thursday, Thermo Fisher will pay $ 47.50 per share for PPD and it will accept approximately $ 3.5 billion in net debt. The price represents a premium of about 24% on the closing price of PPD on Tuesday before reports of a possible transaction.
Companies like PPD that offer clinical research services help carry out the important studies that bring experimental medicines to market. Thermo Fisher played an important role in the pandemic as a manufacturer of diagnostic test kits for Covid-19, as well as laboratory equipment and supplies. The PPD agreement enables the company to expand its range of customer services.
“This is a very natural extension for Thermo Fisher,” Casper said in an interview.
Although Thermo Fisher is best known for its laboratory instruments and tests, it acquired Patheon NV in 2017 in an effort to expand its capabilities for drug manufacturing. The PPD agreement, Casper said, will enable the company to work with drug manufacturers from the earliest stages of laboratory research on new drugs through clinical trials and drug manufacturing.
In the short term, Casper said the move will help the company gain market share and accelerate growth. In the longer term, the merger could help shorten the development time of new drugs by streamlining the process, he said.
“There are a lot of handoffs in the current process,” he said. “There are opportunities to optimize the handovers.”
If Thermo Fisher handles both the clinical trial for a new drug and its manufacture in the late stages, he can get factories ready to scale up faster once there is a sense of the effectiveness of a medicine. “It’s all about speed to market,” Casper said. “I think we can really speed up the timeline.”
Shares of Thermo Fisher rose 3.6% to $ 495.43 in New York at 11:28 a.m., while PPD rose 6.9% to $ 46.98.
Incubator of activity
The drug testing field has become a focus of activity as companies worldwide want to implement new Covid-19 drugs and vaccines, although they are still developing cancer therapies and other treatments. As Covid-19 numbers remain high worldwide, and concerns about future pandemics increase, the value of CROs increases.
PPD has partnered with Gilead Sciences Inc. worked on studies on the Covid drug remdesivir and on research involving Roche Holding AG’s Actemra as an arthritis treatment, according to its website. PPD also offers laboratory services.
What Bloomberg Intelligence says:
“PPD is one of the largest organizations for contract research, with clinical, preclinical and central laboratory end markets. PPD’s marriage to Thermo’s Patheon production unit will create a compelling end-to-end offering for biopharmaceutical customers, with compelling financial metrics. ‘
– Jonathan Palmer, Healthcare Analyst
Click here to read the research
Meanwhile, the general healthcare provider has shed a tear, with companies announcing more than $ 160 billion in transactions this year, nearly three times the volume in the same period of 2020. In February, Icon Plc agreed to acquire PRA Health Sciences Inc. . in a contract research agreement worth approximately $ 12 billion.
PPD was acquired in February 2020 by investors Carlyle Group Inc. and Hellman & Friedman announced. The two private equity firms are still the largest shareholders, according to data compiled by Bloomberg, 38% and 16% of the shares, respectively.
Barclays Capital and Morgan Stanley served as financial advisors to Thermo Fisher. JPMorgan Securities is the exclusive financial advisor to PPD, and Simpson Thacher is the legal advisor.
For more articles like this, please visit us at bloomberg.com
Sign up now to stay ahead of the most trusted business news source.
© 2021 Bloomberg LP