(i) the names of the merger parties;
a. Thermo Fisher Scientific Inc. (“Thermo Fisher”); and
b. PPD, Inc. (“PPD”),
(collectively, the “Parties”).
(ii) a description of the transaction;
The proposed transaction concerns the proposed acquisition of PPD by Thermo Fisher in which Thermo Fisher will acquire 100 per cent of the shareholding of PPD, (“the “Proposed Transaction”).
(iii) a description of the business activities of the merger parties worldwide and in Singapore;
Thermo Fisher is a global manufacturer and supplier of a broad range of analytical, research and bioprocessing products, and pharmaceutical contract development and manufacturing services. Thermo Fisher's product portfolio includes, in particular, analytical instruments, laboratory equipment, software, services, consumables, reagents, chemicals and supplies for pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies.
In Singapore, Thermo Fisher offers life sciences and analytical instruments, laboratory equipment, chemical reagents, consumables, software and several other products in the life sciences industry. Thermo Fisher provides comprehensive laboratory, applied and industrial solutions and serves customers across various industries.
PPD’s main activity is to provide clinical development services, i.e. services that support pharmaceutical and biotech companies in the organisation and evaluation of clinical trials as a Contract Research Organisation (“CRO”). In addition, PPD operates a small number of laboratories where it offers a range of testing services, including bioanalytical, biomarker, central laboratory, Good Manufacturing Process and vaccine science services. PPD’s global activities are split into two divisions: clinical development services, and laboratory services. Both PPD businesses have operations in Singapore.
(iv) a description of the overlapping goods or services, including brand names;
Thermo Fisher submits that the Parties do not provide any overlapping goods and services. However, the Parties have identified a vertical link in respect of the upstream supply of clinical trial supply storage, distribution and other logistics services, and the downstream supply of CRO services.
(v) a description of substitute goods or services;
For clinical trial supply storage, distribution, and other logistics services, Thermo Fisher submits that similar services offered by its competitors would be considered close substitutes from both a demand-side and supply-side perspective.
For CRO services, Thermo Fisher submits that similar services offered by competitors of PPD would be considered close substitutes from both a demand-side and supply-side perspective.
(vi) Thermo Fisher’s views on:
a. definition of the relevant market(s);
Thermo Fisher submits that the precise definition of the relevant markets is not necessary given that the Proposed Transaction does not give rise competition concerns. The Parties have however identified actual and potential vertical links between the Parties in respect of the upstream supply of (i) clinical trial supply storage, distribution and other logistics services, (ii) clinical trial comparator sourcing services, (iii) clinical trial ancillaries sourcing services and (iv) clinical trial packaging services (collectively, the “Clinical Trial Support Services”) and the downstream supply of CRO services.
b. the way in which competition functions in this market;
- For the upstream supply of Clinical Trial Support Services, customers typically evaluate service offerings based on total cost, ability to provide services in a timely fashion, and ability to meet other requirements.
- For the downstream supply of CRO services, customers select CROs based on a variety of factors, including, among other things, total cost, ability to meet project timelines, relevant expertise, etc.
c. barriers to entry and countervailing buyer power; and
Barriers to entry
Thermo Fisher submits that there are no significant barriers to entry into either the upstream supply of clinical trial supply storage, distribution, and other logistics services (or more generally, Clinical Trial Support Services) or the downstream supply of CRO services.
Countervailing buyer power
Additionally, the Parties’ largest customers (both in the upstream and downstream markets) are typically large, sophisticated pharmaceutical and biotech companies with global activities. Many of these companies have in-house capabilities for conducting clinical trials, and for clinical trial support (in terms of supply sourcing and supply chain support).
Pharmaceutical companies drive demand for CRO services(downstream market), and, as a consequence, Clinical Trial Support Services (upstream market), and have significant negotiating power. Pharmaceutical companies purchase products and services based on their views about the optimal means of developing and commercializing their innovative therapies and vaccines. Importantly, they account for a large portion of Thermo Fisher’s revenue, not just in terms of revenue from Clinical Trial Support Services, but also in terms of overall revenue, as they purchase a host of products and services from other divisions of Thermo Fisher.
Pharmaceutical companies could therefore leverage this relationship to put pressure on the combined entity and deter any hypothetical attempt to foreclose competitors. Any such attempt would cause reputational harm and would endanger the combined entity’s important relationships with pharmaceutical companies, who could move, or threaten to move, their overall purchases to Thermo Fisher’s or PPD’s competitors. Moreover, the pharmaceutical companies would view any attempt to foreclose competition by the combined entity as hobbling their efforts to bring new therapies to the market and would thus be unlikely to want to work with PPD or Thermo Fisher in the future.
d. the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).
Thermo Fisher submits that the Proposed Transaction will not result in any non-coordinated effects as there are no horizontal overlaps between the Parties.
Thermo Fisher submits that the Proposed Transaction will not result in any coordinated effects as there are no horizontal overlaps between the Parties.
Thermo Fisher submits that the vertical links between the Parties in respect of the Clinical Trial Support Services will not give rise to competition concerns at a global level (and even less so in Singapore). The combined entity will have no ability or incentive to engage in anti-competitive customer or input foreclosure.