Thermo Fisher Scientific has penned a definitive agreement to acquire leading clinical research organisation (CRO) PPD for $17.4bn.

Thermo Fisher will pay $47.50 per share for PPD and will assume $3.5bn of net debt – this represents a premium of approximately 24% on the unaffected closing price of PPD’s common stock on the Nasdaq as of Tuesday 13 April.

PPD has more than 26,000 staff operating in nearly 50 countries. In 2020, the company went public for the second time in a $1.62bn IPO and generated revenue of $4.7bn.

After the transaction closes, PPD and its teams will become part of Thermo Fisher’s Laboratory Products and Services segment.

As a leader in clinical research, PPD runs clinical studies and offers a range of laboratory services that accelerates getting drugs to market.

Thermo Fisher has become a top producer of Covid-19 test kits and laboratory equipment with pharma and biotech becoming the largest and fastest-growing arm of the firm. The deal reflects the company’s continued expansion from its traditional medical equipment business into clinical research services, meaning it will increasingly be able to run clinical trials as well as acting as a supplier for them.

Thermo Fisher chairman, president and CEO Marc N. Casper described the acquisition as “a natural extension” for the company that will enable it to provide pharma and biotech customers “with important clinical research services and partner with them in new and exciting ways as they move a scientific idea to an approved medicine quickly, reliably and cost-effectively.

“Longer term, we plan to continue to invest in and connect the capabilities across the combined company to further help our customers accelerate innovation and drive productivity, while driving further value for our shareholders.”

“This is a very exciting announcement for our shareholders and will provide customers with an even better opportunity to bring meaningful innovation to the market faster and more efficiently,” said PPD’s chairman and CEO David Simmons.

“Thermo Fisher is a world-class company with a very similar culture and values and will provide a great foundation for our colleagues to continue to deliver for our customers and to develop their own skills and careers.”


Thermo Fisher-PPD: accelerating clinical R&D and time-to-market

By managing both late-stage clinical research for a new drug as well as its production, Thermo Fisher is aiming to bolster its ability to accelerate bringing new therapeutics to market.

“There are a lot of handoffs in the current process [of drug development],” said Casper in an interview, as reported by Bloomberg. “There are opportunities to optimise the handoffs.”

As well as recently investing $600m into boosting its manufacturing supply chain, the company bought contract manufacturer Patheon in 2017 to kickstart its clinical trial services and logistics.

Thermo Fisher said it expects to achieve “cost synergies” of approximately $125m in the three years following the PPD acquisition, including $75m coming from cost-cutting and around $50m in adjusted operating income benefit from revenue-related synergies.

The deal is expected to close by the end of 2021 and is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals.

Casper added: “Both companies have complementary mission-driven cultures, and I can’t wait to welcome PPD’s colleagues from around the world to Thermo Fisher once the transaction is completed.”

The acquisition marks the second major CRO takeover of the year following on from Dublin-based CRO Icon’s purchase of PRA Health Sciences for $12bn to expand its presence in decentralised and hybrid trial services.

With significant deals already underway in the CRO space in 2021, it looks like industry consolidation may be responding to increasing demand for more integrated services in clinical R&D and drug development.