Thermo Fisher Acquiring Life Technologies: Implication Of The Deal

| About: Thermo Fisher (TMO)

Personalized medicine is changing the way medicine is practiced, and how drugs and biologics are developed. It is an emerging practice of medicine with a huge potential for growth. It uses an individual's genetic blueprints to create a personalized medical treatment. The genetic profile is used to make decisions in the prevention, diagnosis and treatment of different diseases. Using this genetic profile, doctors can help their patients with proper medication and can also manage to select the proper dosage of medicine. Personalized medicine will help medical experts to make the most effective clinical decisions for each patient on an individual level. This can also be used to minimize the side effects or to enhance the outcome of medication or treatment.

Growth Potential:

According to research published by PricewaterhouseCoopers, the personalized medicine market in the United States has already reached $232 billion, and it is projected to grow at 11 percent annually. Personalized medicine is creating a market opportunity for many companies, as it is currently at an emerging stage with a huge growth potential. PricewaterhouseCoopers projected that the market for more personalized-based healthcare will grow to $452 billion by 2015.

Increasing demand for personalized care is creating new opportunities for many companies. This is the reason that more market players are investing in companies that are currently working in the market to cater to higher growth of the industry. The recent plan of Thermo Fisher Scientific (NYSE:TMO) is to acquire Life Technologies (NASDAQ:LIFE), which is the latest step in the industry to tap the emerging market.

About acquisition:

Thermo Fisher Scientific, a world-leading healthcare company, is considering buying Life Technologies for $13.6 billion in a deal to reap the benefits of the high growth of personalized medicine. The company has agreed to buy shares of Life Technologies at $76 apiece in cash. Thermo Fisher expects that the acquisition will add 90 cents to $1 to its adjusted earnings per share in the first full year, and after that the deal will close.

Life Technologies Corporation:

Life Technologies Corporation is a global biotechnology and research tool company committed to improving human health conditions. Life Technologies is one of the companies that are currently working on personalized medicine at an advanced level. The company has more than 1,500 specialized scientists in more than 180 countries to drive company innovation. The company has more than 50,000 products in the market with more than 5,000 patent rights at present.


Personalized medicine, which creates a huge growth potential for many healthcare companies, will create new challenges for many traditional healthcare companies. This new market opportunity is forcing the existing market to shift toward personalized medicine models that work quickly, cheaply and most importantly, extremely effectively. The acquisition deal will boost Thermo Fisher's presence in scientific research and genetic analysis, which will include the higher growth of personalized medicine and applied sciences. The deal will strengthen and enhance its global reach. Thermo Fisher will create new opportunities to support the Life Sciences' line of businesses with the help of its leading diagnostic technologies and advanced equipment.

The acquisition of Life will create the opportunity of $275 million of adjusted operating income synergies, including $250 million of cost synergies and $25 million of revenue synergies. As I mentioned earlier, Fisher also expects that the deal will boost per-share earnings, which in turn will create extraordinary value for the shareholders. There is a great opportunity for investors to invest in the personalized medicine market. I give a buy rating to this stock.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.