PPD Gobbled Up by Thermo Fisher Scientific Leading to Greater Consolidation of CROs

PPD Gobbled Up by Thermo Fisher Scientific Leading to Greater Consolidation of CROs

The contract research organization (CRO) space continues to consolidate as just a couple weeks ago, Thermo Fisher Scientific (NYSE: TMO) announced its intention to acquire PPD, one of the world’s top CROs as the boards of directors approved the definitive agreement under which Thermo Fisher will buy PPD for $47.50 per share for a total cash purchase price of $17.4 billion plus the assumption of about $3.5 billion on net debt. The overall purchase price represented a premium of approximately 24%. How will this consolidation impact CRO services as Quintiles merged with IMS to form IQVIA and Lab Corp has absorbed Covance while ICON in February snapped up PRA Health for $12 billion? Now PPD becomes part of the Thermo Fisher $30+ billion revenue behemoth, joining their Laboratory Products and Services Segment. The deal has declared benefits, including 1) establishes Thermo Fisher as global leader in the attractive, high growth research services segment; 2) combination further enhances the value of Thermo Fisher for Pharma and Biotech customers by adding complementary services; 3) creates meaningful benefits to clients; and 4) should produce attractive financial benefits.

The Sector

The clinical research business represents an approximate $50 billion market that continues to grow, and clinical trial sponsors, that is pharmaceutical and biotech firms, seek more efficient and effective ways to develop drugs, and capitalize on the need for scale as sponsors must conduct studies all around the world increasingly including China, which will represent one of the fastest growing markets for drugs and therapeutics.


Long before the pandemic the clinical trials sector was progressing toward greater flexibility and decentralization as the competitive battle for patients undoubtedly would lead right to the home. Patient-centricity would make it easier for clinical trial sponsors to find and retain study participants along with rapid advancements in technology, from ever more powerful and ubiquitous cloud computing infrastructure (e.g. Amazon AWS) to pervasive use of smartphones and devices to growing options with wearables and other remote patient monitoring technology as TrialSite recently reported on. These trends plus telehealth/telemedicine opened up the move to so-called “site-less” trials although in all reality the site would always play a pivotal, anchoring role in research.

But increasingly studies would be conducted in hybrid ways involving new technology, systems, and processes. With the advancement, CROs must become increasingly sophisticated with technology, process disruption and execution.

The New List

The list of tier 1 CROs becomes more combined by the year. Generally, the top 10 list looks like the following:

·         Thermo Scientific   (includes PPD) and revenue at about $38 billion

·         Laboratory Corp of America Holdings (Covance)  $11.6 billion

·         IQVIA (Quintiles & IMS)  $11.1 billion

·         ICON (includes PRA Health) $6 billion

·         Syneos Health (Synteract, Illingworth, etc.) $4.6 billion

·         Parexel International  $3 billion

·         Charles River $2.94 billion

·         Wuxi AppTec $2.1 billion

·         Medpace Holdings $880 million

Of course, consolidators such as Thermo Scientific, Laboratory Corp and IQVIA have other life science business lines that don’t represent specifically CRO-derived revenues.

Who put the Deal Together?

Barclays Capital, Inc. and Morgan Stanley & Co. LLC are serving as financial advisors to Thermo Fisher, and Cravath, Swaine & Moore LLP and Arnold & Porter Kaye Scholer LLP are serving as legal counsel. For PPD, J.P. Morgan Securities LLC is serving as exclusive financial advisor, while Simpson, Thacher & Bartlett LLP is serving as legal counsel.

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