Thermo Fisher Scientific can acquire Olink

The Bundeskartellamt has cleared plans by Thermo Fisher Scientific Inc., USA, to acquire Olink Holding AB (publ), Sweden, a global biotechnology company.

As a supplier of research equipment, Thermo Fisher Scientific is one of the leading companies offering solutions for life science research worldwide.

Olink offers assays and services in the field of proteomics, that is the study of the (in particular human) proteome, which give researchers a greater insight into how diseases develop and thus facilitate the development of better and more targeted therapies. The acquisition is set to cost around 2.8 billion euros.

Andreas Mundt, President of the Bundeskartellamt: “Where a major life science company acquires an innovative biotechnology company, it is crucial to carefully analyse the markets and gain an understanding of how different activities and branches of research complement each other. Especially in a field as promising as proteomics, which is of great significance for the health of us all, we need to ensure that a merger of two companies which are leaders in their respective fields does not stifle research. Having examined the acquisition, we have no serious competition concerns about the project. The merger will result in only insignificant market share additions on the markets affected. Potential product bundling or the risk of market foreclosure, which have been thoroughly examined, are ultimately not expected to occur.”

The project had to be notified in Germany due to a provision in the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen – GWB) on the so-called transaction value threshold. This provision provides for the examination of mergers where companies are acquired at a purchase price of more than 400 million euros although they generate little or no turnover at the time of the transaction, provided that they have substantial operations in Germany. The Bundeskartellamt can thus examine merger projects which, despite the target company generating little turnover, are of great economic significance (for example, companies that are very much research-driven or cases where new growth markets are affected).

Olink offers protein analyses via a biomarker platform (antibody test) for samples of human body fluid (in particular blood). The reagent kits are based on a proprietary technology called Proximity Extension Assay (PEA). This procedure, a so-called high-plex analysis, allows for a simultaneous, targeted analysis of up to 5,400 specific target proteins in a very short time. This is particularly relevant when conducting cohort studies.

Among other operations, Thermo Fisher Scientific develops and manufactures so-called High Resolution Accurate Mass (HRAM) mass spectrometers, which are also, but not exclusively, used in protein analysis. These measuring instruments, which are based on a completely different technology and are highly specialised, have the advantage of being able to identify up to 20,000 human target proteins and potentially more than a million proteoforms. They allow for an exploratory, that is a non-targeted, analysis of the proteins in a sample.

The two technologies belong to different product markets; however, they are sometimes used complementarily and, if applied in parallel, allow for a more accurate analysis of the proteome which cannot be achieved by using just one of the technologies.

Olink’s superior position in the market for high-plex analyses and Thermo Fisher Scientific’s strong position in the neighbouring market for HRAM mass spectrometers will not be strengthened by the merger. This is due to the fact that the customer bases for the two products, which are usually procured independently of one another, have so far overlapped only to a very limited extent, and in particular due to the competitive landscape in the relevant markets. Potential competition between the manufacturers of the two technologies could only be considered to exist if the markets were to merge into an overall proteomics discovery market. However, this is not expected to happen within the five-year forecast period.

Conglomerate effects arising from product bundling or market foreclosure, for example, are also unlikely to occur. This is due to the differences in technology, which make technical bundling largely impossible, as well as the great differences in procurement cycles and pricing, which make commercial bundling difficult. However, the major reason why the merger is not expected to significantly impede competition is that customers have sufficient alternative suppliers to choose from, that these competitors have already implemented counter strategies in the form of cooperation initiatives and acquisitions, and that HRAM mass spectrometer and in particular high-plex protein analysis markets are innovative growth markets. There are innovative competitors in both markets which can contest the parties’ market position. These competitors are also increasingly diversifying their portfolios through acquisitions in the field of proteomics. A concentration of market structures has therefore neither been observed nor is it to be expected.

Taking all these factors into account, the merger is ultimately not expected to significantly impede effective competition.