MERGERS & ACQUISITIONS
Thermo Fisher to buy drug ingredients maker Patheon $7.2 billion acquisition opens a new business front for the dominant scientific instrument and supplies firm Thermo Fisher Scientific has reached a deal to acquire Patheon for $7.2 billion, including debt. The transaction will take Thermo Fisher, a leading maker of scientific instruments and lab supplies, into a completely new market: pharmaceutical contract development and manufacturing. The deal, which is expected to close at the end of this year, combines Thermo Fisher, which has 55,000 employees and annual sales exceeding $18 billion, with Patheon, which has 9,000 employees, mostly in the U.S. and Europe, and annual sales of $1.9 billion. Patheon was created in late 2013 when the Dutch chemical maker DSM combined its active pharmaceutical ingredients business with the original Patheon, a Canadian contract formulator of drugs in finished dose form. Patheon was majority owned by the private equity firm JLL Partners. Today, DSM and JLL together own 73% of Patheon’s shares. They have agreed to accept Thermo Fisher’s $35.00-per-share offer, which is a 66% premium to the $21.00-pershare price at which the two sold stock to the public last July and a 35% premium over Patheon’s share price on Friday, May 12, before the transaction was announced.
By acquiring a leading drug contract development and manufacturing firm, Thermo Fisher gains entry into a fragmented $40 billion-per-year market, says Thomas Loewald, Thermo Fisher’s chief commercial officer. Thermo Fisher is no stranger to pharmaceuticals: The industry is Thermo Fischer’s single biggest customer for the instruPatheon’s bioproduction suite in Brisbane, Australia, ments and lab consumables it uses stainless steel reactors with single-use linings now makes. And Loewald points from Thermo Fisher. out that Thermo Fisher already has a business that packages, labels, and Until recently, Thermo Fisher’s acquidistributes drugs to clinical trial patients and sitions have bolstered its existing instruthat fits well with Patheon. mentation franchise. Last year, for instance, James Bruno, president of the consulting the firm acquired the electron microscopy firm Chemical & Pharmaceutical Solutions, expert FEI and the gene analysis tool maker observes that Patheon will allow Thermo Affymetrix. Fisher “to control the entire supply line from By undertaking such an unexpected the minute you start thinking about making combination, Thermo Fisher highlights its a compound through the manufacturing willingness to move beyond life sciences of the dosage, to the clinical distribution.” tools “into areas that are upstream,” even But he cautions that most pharmaceutical if that includes acquiring customers for its customers don’t want a one-stop shop and instruments and services, observes Puneet instead prefer to deal with experts in individ- Souda, a stock analyst at the investment firm ual links of the drug development chain. Leerink.—MARC REISCH
OUTSOURCING
CREDIT: PATHEON
Mood is bright at new drug ingredients show Attendees at CPhI North America, the new U.S. iteration of a popular European pharmaceutical ingredients trade show, found the sector in continued exuberance. Investment has marched on, especially in the U.S., as contract development and manufacturing firms respond to demand for more capacity. And most firms reported significant sales growth. But discussion at the event, held in Philadelphia from May 16–18, was dominated by news of two acquisitions: Thermo Fisher’s plan to acquire the drug services firm Patheon for $7.2 billion (see story above) and Novacap’s agreement to buy control of
the French drug ingredients maker PCAS in a deal that values PCAS at more than $250 million. Many were puzzled by the combination of Thermo Fisher, a major supplier of laboratory instruments, and Patheon. Others, though, saw the emergence of a huge “onestop-shop” for the drug industry through the combination of Thermo Fisher’s clinical delivery business and Patheon’s manufacturing services. Novacap’s acquisition of PCAS, though a much smaller deal, is the second move by the venture-backed firm to expand a pharmaceutical business originally composed of
generic analgesics picked up from Rhodia in 2003. Novacap acquired Germany’s Chemie Uetikon in 2015. Among the companies at CPhI announcing investments was Cambrex, which plans to spend $2.4 million to increase reactor capacity by 30% at the former PharmaCore, a North Carolina kilogram-scale drug manufacturer that Cambrex acquired last year. CPhI North America, which essentially replaces the Informex trade show, claimed 7,500 attendees and 630 exhibitors, figures that are more than triple what Informex drew to New Orleans last year. Both brands are owned by UBM.—RICK MULLIN MAY 22, 2017 | CEN.ACS.ORG | C&EN
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