As the biologics Contract Development and Manufacturing Organization (CDMO) market expands at double-digit rates, Thermo Fisher Scientific (TMO) is doubling down on its portfolio again, after acquiring Henogen SA (viral vector manufacturer) and Mesa Biotech, Inc earlier this year.
PPD’s acquisition will boost TMO’s position in the CDMO market. Here are 7 reasons why:
1 – While the earlier deals to acquire Patheon for $7.2 Bn and Brammer Bio for $1.7 Bn were focused on enhancing the manufacturing capabilities, PPD’s acquisition gives TMO an opportunity to tap in the preclinical discovery and clinical research outsourcing market. TMO recorded the highest top-line Y-o-Y revenue growth of over 26% in 2020 in comparison to the last five years.
2 – The consolidation of PPD with TMO’s Patheon manufacturing unit creates a compelling end-to-end offering for biopharma sponsors and an opportunity to cross-sell services through revenue stream synergies.
3 – The deal allows TMO to not only be a producer of diagnostic kit, equipment, consumables and COVID-19 vaccine/ therapies but also offer comprehensive services to shorten the time to market these therapies. TMO can bank on PPD’s recent experience to support decentralized trials – the fastest growing service segment in the CRO industry, while the mobility disruptions due to the pandemic continue to persist.
4 – Based on a survey conducted by a leading decentralized service provider, there has been an over 30-35% increase in adoption of the decentralized trial delivery model since the pandemic. PPD also reported a 6% increase in adoption of decentralized trials, 7% rise in hybrid clinical trials as opposed to a decline by 13% in the traditional clinical trial delivery model between Q4 2020 to Q1 of 2020.
5 – PPD’s patient access/ site conduct capabilities, biostatistics, data-driven clinical development, and regulatory expertise for early and late-stage clinical trials will enrich TMO’s Clinical Trial service offering beyond supply chain support for clinical specimens and drug products. The expanded portfolio will help build long-term relationships with small and mid-sized pharma and biotech sponsors due to increased engagement early on in the drug development process.
6 – Given that both companies have a track record of growth and robust performance, the acquisition will generate revenue synergies through cross-selling services such as central laboratory services, bioanalytical testing, drug substance/ drug product services, viral vector services, and clinical trial services across multiple therapy areas to the biopharma customers.
7 – TMO will face initial hurdles around integrating PPD – a service-focused company into its product-focused company structure. However, the alignment of short-term goals of expanding into the Asia-Pacific market and vision to offer unique value to the biopharma companies will ease this integration.