Drugmakers are developing more biologic drugs and building new plants to manufacture them. And given that those plants all need filtration systems, analysts say it is no wonder that Pall ($PLL) would become a buyout prize. The Port Washington, NY-based company is being scooped up in $13.8 billion deal that rivals those orchestrated by some of its pharma clients.
Washington, DC-based Danaher is buying Pall to get its hands on the filtration expert's rapidly growing biopharma business as part of a plan to split itself into two publicly traded companies, a growth company focused on science and technology and a "diversified industrial company."
|Danaher CEO Thomas Joyce|
"Pall will provide us a leading business with significant runway for expansion and strengthens our life sciences position in the strategically-attractive, high-growth biopharmaceutical market," Thomas Joyce Jr., CEO of Danaher, said in a statement.
Pall generated $2.8 billion in revenue in its last fiscal year, $1.5 billion of that from its life sciences segment. The way Evercore ISI analyst Ross Muken sees it, with drugmakers focused on biologic drugs, that piece of its business can only be expected to be a revenue sponge. "Biologic drugs will go from about 20-25% of the market to 50% in the next few years," Muken told Reuters. "That means an increase in production and more demand for filtration products and services."
Danaher will keep the growth assets, including the new Pall operations, and Joyce will continue as CEO of that company. The as-yet-unnamed industrial company will be headed by James Lico, who leads Danaher's retail fuel and test and measurement businesses, the company said in a separate announcement.
Many of the Big Pharma players are building or expanding their biologics manufacturing as they build and expand their biologic drug portfolios. Filling in between are a host of contract manufacturers, which see biologics as their ticket to growth going forward.
Alexion ($ALXN), maker of rare disease drug Soliris, announced this week it would spend more than $500 million to build a biologics plant in Ireland. Bristol-Myers Squibb ($BMY) is also siting a new $900 million biologics plant in that country, while Roche ($RHHBY) launched a $900 million three-plant biologics production expansion in 2013. Novartis ($NVS) has a $500 million biologics plant in Singapore slated to open in 2016.
- here's the Pall deal announcement
- here's the announcement on the split
- read the Reuters story