There is much money to be made in the biologics manufacturing industry, especially if the focus is on creating medicines and vaccines. That's why large companies like GE are getting in on the fun by either creating new divisions to support biologics manufacturing or expanding upon existing ones. GE decided to go with the latter by scooping up several businesses from Thermo Fisher Scientific recently to expand the healthcare arm of GE manufacturing.
The deal is for a company named HyClone—Thermo Fisher Scientific's cell culture media arm—and a separate gene modulation and magnetic bead business, as well as a couple of other businesses. The deal was struck for $1.06 billion and is subject to government regulatory approvals, so it isn't final just yet. Once GE receives regulatory approval, the deal is expected to close early in 2014, likely in the first quarter. The purchase comes as no surprise for those who follow GE, as the global giant has recently ramped up its investment in high-tech manufacturing and medical technologies, which often come with very large profit margins. Even though the deal still hasn't closed, some details are available about just how the purchase will affect GE's biologics manufacturing plans.
The newest additions to the family will become a part of GE Healthcare's Life Sciences division and will likely blend seamlessly into the company's existing research and development efforts. HyClone is an interesting purchase because cell culture media shows a lot of promise in the search for drugs and treatments for cancer, as well as vaccines for other diseases and conditions. The gene modulation and magnetic bead business will help with protein analysis and medical diagnostics. GE also hopes that the Thermo Fisher businesses will help enhance its biologics manufacturing efforts and make them more profitable.
The future financial benefit of GE's newest acquisitions is fairly clear, but there may be yet another reason for the purchase. The development of new medicines is a booming and very competitive business, so GE manufacturing executives had to find a way to keep up with other companies. Competitors like Roche and Boehringer Ingelheim have been busy recently making their own biologics manufacturing investments and acquisitions, so it makes sense for GE to do the same. By buying already-established properties, the company can speed up the development process and bring new technologies and medicines to the market faster.
The medical and pharmaceutical industries makes billions of dollars every year, so companies who wish to expand their research and development efforts like GE are moving into the sector. A great way to do that is to buy businesses that specialize in biologics manufacturing and incorporating them into the company, which GE has now done. If this acquisition is successful, it just may spell good things for GE in the future, as well as for its shareholders.
(Photo courtesy of freedigitalphotos.net)
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