Thermo says buying PPD will position it as leader in the “high growth” CRO sector and help it win more business from new and existing customers.
Thermo Fisher Scientific announced its intention to buy contract research organization (CRO) PPD for $17.4 billion in a statement on Thursday, citing demand from pharma and biotechnology sector customers. Thermo Fisher’s CEO Marc Casper said “The acquisition of PPD is a natural extension for Thermo Fisher and will enable us to provide these customers with important clinical research services and partner with them in new and exciting ways.” PPD provides clinical research and laboratory services. It employs more than 26,000 people in nearly 50 countries. In 2020, PPD generated revenue of $4.7 billion. Thermo Fisher predicted the deal would complete this year and said PPD will become part of its Laboratory Products and Services Segment. The firm also said expects to realize total synergies of approximately $125 million by year three, with cost synergies of approximately $75 million.
Evercore ISI analyst Vijay Kumar said, “From a strategic perspective, this fits in with Thermo Fisher’s ‘One Stop Shop’ strategy for Biopharma customers.” Thermo Fisher already has a clinical trial services business and a bioprocessing and manufacturing, which it gained when it bought Patheon in 2017. It further branched out on the manufacturing side through its acquisition of gene therapy maker Brammer Bio in 2019. PPD will help round out the firm’s offering according to Kumar, who said, “The only gap in this continuum is post R&D work, the clinical trial CRO work, which PPD will fil in nicely. Eric Coldwell from Baird had a similar take, likening the deal to the Patheon takeover and suggesting the “transaction would make sense fundamentally.”