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Thermo Fisher (TMO) Expands in Viral Vector With Henogen Buyout

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In an effort to expand its cell and gene vaccines and therapies footprint internationally, Thermo Fisher Scientific Inc. (TMO - Free Report) recently acquired Belgium-based Henogen S.A. Henogen is the viral vector manufacturing business of life sciences service and technology supplier, Groupe Novasep SAS.

Per the financial terms of the deal, Thermo Fisher completed this acquisition for a deal value of approximately €725 million (roughly $880 million) in cash. This business will get integrated within Thermo Fisher’s Pharma Services business within the broader Laboratory Products and Services Segment.

A Glimpse of Henogen’s Business

This viral vector manufacturing business provides biotechnology companies and large biopharma customers contract manufacturing services for vaccines and therapies. It currently has two locations in Seneffe and Gosselies, Belgium.

Novasep's viral vector business’ estimated 2020 revenues are €80 million (approximately $95 million).

Importance of the Deal

According to Thermo Fisher, apart from expanding its international capabilities in this niche, the addition of Henogen’s manufacturing capabilities in Europe complements the company’s four development and manufacturing sites in North America. Henogen currently has approximately 400 employees with substantial operational and technical expertise in a broad range of viral vector classes. Thermo Fisher is also optimistic about the addition of this talented team with more than two decades of experience across a broad range of viral vectors.

Thermo Fisher stated that the combination will benefit its global customers seeking support and capacity in the region as well as European customers bringing new medicines to patients inside and outside of Europe.

Huge Industry Prospect

The cell and gene therapy market is currently growing by leaps and bounds. According to a Grand View Research report, high transfection efficiency, effective gene delivery, and stable gene expression have made viral vectors a preferred choice for gene transfer. Going by the report, the global viral vectors & plasmid DNA manufacturing market size was estimated at $368.3 million in 2019 and is projected to expand at a CAGR of 14.52% during 2020 - 2027.

Previous Investment in Cell and Gene Therapy

In 2019, the company made a major investment in this emerging space with the $1.7 billion acquisition of Brammer Bio, a viral vector contract development and manufacturing organization (CDMO). The company with its services enables biopharma customers to develop gene therapies and gene-modified cell therapies, thereby aiding them to deliver advanced medicines to patients. This addition is helping Thermo Fisher’s pharma and biotech customers provide breakthrough gene and cell therapies to patients with rare diseases. Prior to that, the company purchased Advanced Bioprocessing business from BD, which is expected to significantly expand the company’s Life Sciences Solutions line of offerings.

 

Further, Thermo Fisher recently expanded its center of excellence in Suzhou, China, by opening a new bioproduction factory for manufacturing single-use technologies to meet demand for biologics in the Asia-Pacific region. Prior to this, it formed an alliance with global biotech company CLS to help meet high demand for biologics. Per a long-term agreement, Thermo Fisher will also take over CSL's state-of-the-art biologics facility in Switzerland.

Price Performance

In the past three months, the stock has gained 9.1% compared with 5% growth of its industry.

Zacks Rank and Key Picks

Thermo Fisher currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader medical space are McKesson Corporation (MCK - Free Report) , PerkinElmer (PKI - Free Report) and IDEXX Laboratories (IDXX - Free Report) , each carrying a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McKesson has a projected long-term earnings growth rate of 6.6%.

PerkinElmer has a projected long-term earnings growth rate of 19.5%.

IDEXX has an estimated long-term earnings growth rate of 15.8%.

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