Thermo Fisher eyes up to $50bn M&A in coming years

Not shy of multi-billion-dollar acquisitions, Thermo Fisher says it expects to spend another $40-50 billion on “disciplined” M&A when the time is right.

Since the formation of Thermo Fisher through the merger of Thermo Electron and Fisher Scientific in 2006, the company has made 44 acquisitions across all aspects of the life sciences services space, representing more than $69 billion.

Some of the biggest include the $13.6 billion Life Technologies buy in 2013, the $7.2 billion acquisition of contract manufacturer Patheon in 2017, and the $17.4 billion purchase of contract research organization (CRO) PPD in 2021.

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Such colossal expanse, therefore, led an analyst at the BofA Securities 2023 Healthcare Conference to glibly accuse Thermo Fisher of now “getting too big to buy anything that has meaningfully moved the needle” in terms of growth.

“7% to 9% long-term core growth is the portfolio that we have today,” explained CEO Marc Casper, who reflected on the raising and lowering of Thermo Fisher’s outlook following M&A. “When we bought Life Technologies, we actually took the business from 4% to 6%, to 3% to 5%, because we bought a large business that was going slower.”

He added the “market is incredibly fragmented” and spoke about further M&A opportunities to retain high single-digit growth.

“We put in our long-term model that we would expect to do $40 billion to $50 billion of capital deployed on M&A in the upcoming years. We think there’ll be plenty of opportunities to do that.”

However, Casper noted the need to remain “very disciplined” as it eyes up further acquisitions.

“M&A is a lot of work, so you got to get paid for that work right in terms of generating return for the shareholders. And so you’ll see us be very active and working, you’ll be seen us be very selective of what we actually do. And then we will do a phenomenal job with what we buy. And that’s been our track record. And that’s earned us the right to do more M&A when we think it’s the right M&A over time.”

Past 20 acquisitions: