Thermo Fisher to Buy Brammer Bio, Tightens Gene Therapy Grip

Thermo Fisher Scientific Inc. TMO recently made a major investment in the emerging space of gene therapy to strengthen its portfolio. The company has entered into a definitive agreement to acquire Brammer Bio, a prominent name in gene and cell therapy domain for a deal value of $1.7 billion in cash.

The transaction is expected to close by the end of the second quarter of 2019, subject to the fulfilment of certain closing conditions.

Brammer Bio is a viral vector contract development and manufacturing organization (CDMO). The company with its services enables the biopharma customers to develop gene therapies and gene-modified cell therapies, thereby aiding them to deliver advanced medicines to patients.

Brammer Bio holds an impressive track record of revenue growth. The company is making concerted efforts to generate $250 million of revenues in 2019 and expects to consistently exceed the projected market growth rate of 25% over the mid-term.

Is the Deal Strategic Fit?

The gene therapy is an attractive area for drug development and it is gaining popularity quite fast given that it can better address the root cause of a severe disease. Per Allied Market Research, for certain disorders wherein genetic mutations may induce a deficient or a non-functional protein production, there gene therapy can fix the underlying defect and provide a path to produce the functional protein.

According to an Allied Market Research report, the gene therapy market holds immense potential worldwide.  Globally, the market is projected to reach $4,402 million by 2023 from $584 million in 2016, thus witnessing an encouraging CAGR of 33.3%.

Thermo Fisher Scientific Inc. Price

Thermo Fisher Scientific Inc. Price | Thermo Fisher Scientific Inc. Quote

This clearly indicates that the latest move by Thermo Fisher is strategically aligned and well timed.

The Consolidation at a Glance

On completion of the deal, Brammer Bio will emerge as part of Thermo Fisher's pharma services business within its Laboratory Products and Services wing. According to the company, Brammer Bio's viral vector capabilities combined with the former’s GMP production expertise and proprietary bioprocessing plus cell culture technologies, will create a unique position for the combined entity in this incredibly rapidly-growing market.

Thermo Fisher expects this inclusion to be accretive to its adjusted EPS by 10 cents in the first full-year of the integration.

Zacks Rank and Key Picks

Thermo Fisher currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Abbott Laboratories ABT, Penumbra, Inc., PEN and Masimo, Inc. MASI, each stock currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Abbott’s long-term earnings growth rate is projected to be 11.73%

Penumbra’s long-term earnings growth rate is expected at 20.93%.

Masimo’s long-term earnings are forecast to grow at 15.60% rate.

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