All Clarivate Analytics websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.

More information on our cookie policy.

BioWorld. Link to homepage.

/images/Cortellis_Flagship_Logo_TM_RGB_Color.png
  • BioWorld
  • BioWorld MedTech
  • BioWorld Asia
  • BioWorld Science
  • Data Snapshots
    • BioWorld
    • BioWorld MedTech
  • Special reports
    • Artificial intelligence
    • Coronavirus
    • Diagnosing and tracking COVID-19
    • Drugs to Watch 2020
    • The next pandemic
    • Premium reports
      • BioWorld Financings Reports
      • Disease Forecast Reports

BioWorld. Link to homepage.

  • Sign In
  • Sign Out
  • My Account
Subscribe
BioWorld - Saturday, April 10, 2021
Home » Blogs » BioWorld MedTech Perspectives » Thermo Fisher to buy contract drug developer, manufacturer Patheon NV for $7.2B

BioWorld MedTech Perspectives
BioWorld MedTech Perspectives RSS FeedRSS

BioWorld MedTech

Thermo Fisher to buy contract drug developer, manufacturer Patheon NV for $7.2B

May 16, 2017
By Stacy Lawrence
No Comments

Thermo Fisher Scientific Inc. will acquire drug development and delivery services provider Patheon NV for $7.2 billion, including $2 billion of debt assumption. Diagnostics and laboratory-focused Thermo Fisher expects that the addition of the Durham, N.C.-based contract development and manufacturing organization (CDMO) will add to its offerings for biopharmaceutical customers.

The Waltham, Mass.-based company anticipates the deal will be accretive to adjusted EPS by adding $0.30 in the first full year after deal close, which is expected to be before year end. The $35 per share price tag was about a 35 percent premium to the Friday close for Patheon (NYSE:PTHN).

"As you know, we are the leading supplier to the pharmaceutical and biotech industry. In fact it's our largest and fastest growing end market. Today, we support our customers in research, clinical trials and logistic services, and production," explained Thermo Fisher president and CEO Marc Casper on a conference call about the deal. "Patheon's capabilities are highly complementary and will considerably strengthen our unique value proposition for these customers. Patheon gives us entry into the contract development and manufacturing services market."

Patheon will become part of Thermo Fisher's Laboratory Products and Services business. It has about 9,000 employees with facilities mostly in North America and Europe. It had about $1.9 billion in 2016 revenue.

Thermo Fisher hopes to cash in on a consolidating CDMO market, which currently is worth about $40 billion a year and growing at a mid-single to high-single digit annual rate. It noted that the segment is highly fragmented, with even the top 10 players comprising only about 35 percent of the market.

"Joining Thermo Fisher's leading global organization will enable us to expand our reach and capitalize on the tremendous success they have achieved in recent years. Together, both companies are better positioned to scale a new value chain capabilities to expand our offerings to our biopharma customers," said Patheon CEO James Mullen.

DRIVING GROWTH

Patheon is focused on a trio of business segments: development services including formulation; active pharmaceutical ingredient (API) manufacturing for small and large molecules; and finished dosage form manufacturing to make tablets, softgels and injectables.

Thermo Fisher revenue during the first quarter was up 11 percent from the prior quarter a year earlier to almost $4.8 billion; only 4 percent of that was organic with the remainder driven by acquisitions. That was predominantly driven by the acquisition of FEI Co. in September 2016, and its addition to the Analytical Instruments segment. The Laboratory Products and Services business had $1.7 billion in revenue during the first quarter, an increase of 3 percent.

Last quarter, Thermo Fisher completed two deals that it describes as "strategic bolt-on acquisitions." These were for bioproduction measurement, control company Finesse Solutions and cloud-based digital science company Core Informatics.

Thermo Fisher expects the Patheon deal will enable it to upsell its existing biopharmaceutical customers. Casper outlined the anticipated strategic benefits, "First, it gives us entry into the large and fast growing CDMO market. It also makes our unique value proposition for our biopharma customers even stronger by adding highly complementary development and manufacturing capabilities that will allow us to further accelerate growth."

"Third, as you know, we have a proven track record in success with integrating acquisitions and our ability to leverage that playbook is extremely powerful in generating revenue synergies as you have seen other transactions," Casper added. "We'll be able to leverage our industry leading scale the commercial infrastructure to expand their customer reach. And, finally, this transaction offers attractive financial benefits to create value for our shareholders."

Thermo Fisher expects $120 million in synergies within three years after the deal closes, with about $90 million in cost synergies and another $30 million in adjusted operating income benefit from revenue-related synergies.

It plans to pay for the acquisition with about $5.2 billion in debt and an additional $2 billion in equity. Thermo Fisher already has the holders of 73 percent of Patheon shares on board with the deal with major shareholders JLL Partners and Royal DSM having entered tender and support agreements.

Wall Street gave the deal a tepid embrace, sending Thermo Fisher (NYSE:TMO) shares up 0.4 percent on the news, but its shares have gained a whopping 22 percent this year, largely on strong first quarter earnings. Shares closed at $172.26.

You must login or register in order to post a comment.

Report Abusive Comment

Popular Stories

  • Free access to BioWorld coronavirus articles

    BioWorld

    The articles in this collection are from BioWorld’s ongoing coverage of the COVID-19 coronavirus outbreak. Note that we have added three critical tables which are...

  • Today's news in brief

    BioWorld
    BioWorld briefs for April 9.
  • IPO puzzle pieces

    Somalogic to merge with CM Life Sciences II SPAC, as trendy IPO path continues

    BioWorld MedTech
    Somalogic Inc. has agreed to go public via a merger with blank-check company CM Life Sciences II. Upon closing, CMLS II – a special purpose acquisition company...
  • Today's news in brief

    BioWorld MedTech
    BioWorld MedTech's briefs for April 9.
  • Earth threatened by virus

    Global cases rise, but more weapons advance to combat COVID-19

    BioWorld
    As COVID-19 vaccinations continue to roll out, momentum builds with strong phase III data for what could become the fourth and fifth walls of defense in the U.S.
cortellis ad

BioWorld Premium

Enjoy extended coverage for the most complete market view with BioWorld, BioWorld MedTech, and BioWorld Asia in a single, easy to access subscription.

Subscribe
  • BioWorld
    • Today's news
    • Analysis and data insight
    • Clinical
    • Data Snapshots
    • Deals and M&A
    • Financings
    • Newco news
    • Opinion
    • Regulatory
    • Science
  • BioWorld MedTech
    • Today's news
    • Clinical
    • Data Snapshots
    • Deals and M&A
    • Financings
    • Newco news
    • Opinion
    • Regulatory
    • Science
  • BioWorld Asia
    • Today's news
    • Analysis and data insight
    • Australia
    • China
    • Clinical
    • Deals and M&A
    • Financings
    • Newco news
    • Regulatory
    • Science
  • BioWorld Science
    • About
    • Archives
    • Today's news
    • Search BioWorld Science
  • More
    • About
    • Archives
    • Article reprints and permissions
    • Contact us
    • Cookie policy
    • Copyright notice
    • Data methodology
    • Privacy policy
    • Share your news with BioWorld
    • Staff
    • Terms of use
A Clarivate Analytic solution. Link to Clarivate website.
Follow Us

Copyright ©2021. All Rights Reserved. Design, CMS, Hosting & Web Development :: ePublishing