How Thermo Fisher buying Patheon could simplify pharma supply chains

By Dan Stanton contact

- Last updated on GMT

iStock/Jrcasas
iStock/Jrcasas
Thermo Fisher Scientific is set to buy contract manufacturer Patheon, but what would this mean for the life science tech firm?

Bloomberg announced​ last night that Thermo Fisher is in talks to buy contract development and manufacturing organisation (CDMO), according to “people with knowledge of the matter.” ​This has since been confirmed, with Thermo Fisher entering a tender and support agreement to buy Patheon for $7.2bn this morning.

Acquisition hungry Thermo Fisher

Since Thermo Electron and Fisher Scientific merged in 2006, Thermo Fisher has pursued an M&A heavy strategy. Just this year, for example, it added stem cell reagent company MTI-Globalstem and its automation partner Finesse Solutions​ to its 200 plus brands and subsidiaries.

CEO Marc Casper has been vocal about continued takeover activity to build up the business. In 2015,​ a year after shelling out $13.6bn for Life Technologies, he announced a further $15bn was at Thermo Fisher’s disposal for bolt-on and strategic acquisitions.

Adding Patheon will expand Themo's business beyond life science tools and tech and plunge it into the fragmented contract manufacturing industry.

New direction

Patheon will give Thermo a broad portfolio of contract manufacturing capabilities, from small molecule APIs and finished formulations, to delivery technologies and biologics services.

The firm, which reported $1.87bn in revenue last year, sits among the top three pure-play CDMOs with Lonza and Catalent.

It claims to have been involved in 17 out of 55 (30%) of all outsourced NDA approvals in 2016, and worked on 112, or 25%, of all US approvals (new entities and generics) over the past ten years.

As for its network, Patheon has 30 facilities, split up by: 11 commercial-scale finished dosage forms, four API process development and manufacturing, four biologics, and ten pharmaceutical development plants. Geographically, the firm has 13 sites in North America, 10 in Europe, and three in Australasia.

Supplying itself

Owning a manufacturing network and being a major supplier of processing tools and tech could work for Thermo Fisher, and Casper said today Patheon's capabilities "are an excellent complement to our industryleading offering."

German drugmaker Merck KGaA became a major player in the life science services industry through its acquisition of the Millipore Corporation for $7bn in 2010​, fending off a takeover bid from Thermo Fisher itself.

Merck has since bolstered the subsidiary through acquisitions – the largest being Sigma-Aldrich​.

With the Patheon deal, Thermo Fisher will be coming from the opposite direction. But Patheon – and presumably its customers – would likely benefit from a supply of tech and consumables at a preferential ‘in-house’ rate, and could give the CMO an advantage over its rivals.

Related news

Related products

TCC TB – a new filler for direct compression

TCC TB – a new filler for direct compression

Jungbunzlauer | 09-Oct-2017 | Technical / White Paper

TCC TB is a tricalcium citrate tetrahydrate designed to function as a direct compression excipient. It combines exceptional compression characteristics,...

Steridose

Optimizing vessel geometry for mag drive agitators

Steridose, Inc | 14-Sep-2017 | Technical / White Paper

The performance of a bottom mount magnetically driven agitator (mag drive mixer) is heavily dependent on its relationship with the vessel’s geometry, baffles,...

Related suppliers