Thermo Fisher Scientific said it would acquire contract researcher PPD for $17.4 billion as it looks to add more muscle to its pharmaceutical services business.

Thermo Fisher will pay $47.50 per share – a premium of 24 per cent above its $38.36 closing price before news of the deal was first reported.

Over the past few years, Thermo Fisher has doubled down on boosting its pharma service business that provides raw material for new treatments and clinical trial services with acquisitions of gene and cell therapy maker Brammer Bio and Patheon, a Dutch manufacturer of drugs for clinical trials.

The PPD deal is expected to add $1.40 to Thermo Fisher’s adjusted earnings per share in the first 12 months after its close, expected by the end of 2021, Thermo Fisher said.

PPD, which went public last year, helps companies in the drug development process through preclinical consulting, designing and conducting clinical trials. It was hired by Moderna to oversee its COVID-19 trial sites.

The deal should also help PPD win more work as the COVID-19 pandemic has heightened the need for key suppliers for drugmakers, said Cowen analyst Doug Schenkel. Thermo Fisher already supplies drug ingredients to many in the pharma and biotech industry.

“There is an enormous backlog within PPD’s book of business on all of those normal trials that are coming back online that somehow were affected by the pandemic,” Thermo Fisher Chief Executive Officer Marc Casper told Reuters.

“The funding environment [for clinical research] around the world is very strong and the market growth here is very good and we’re super well-positioned to capitalise on it,” he added.