Third Bridge专家访谈讨论Merck收购Bio-Techne后的组合互补与整合风险

[[00:01:19]]
Why do you think Bio-Techne is an attractive acquisition target for Merck? What specific portfolio gaps is the combined entity looking to fill here?

[[00:01:35]]
I think it's a very interesting acquisition by Merck. I think Bio-Techne is filling a large gap that Merck has had in their portfolio for some time. They did try to get into the cell and gene therapy field some years back with the acquisition of FloDesign Sonics. However, I don't think that panned out exactly as intended. Now they are going after a more mature business in Bio-Techne, which is offering tools, technologies, reagents, instrumentation for a big set of developers. I see Merck as more the player that holds tools and technologies for early development, early discovery phases, while Bio-Techne is filling in more of the gaps in the later stages, the manufacturing, the quality control of manufacturing of cell and gene therapies. Together, it's more of a complete portfolio where they can really cover in everything from start to finish when it comes from discovery to cell and gene therapy.

[[00:02:56]]
What leading assets, platform technologies or specific protein lines from Bio-Techne are the most commercially lucrative pieces for Merck?

[[00:03:08]]
I would say as cell and gene has become not only like a dream, a vision of a therapy, but a real therapy as cell and gene is getting higher and higher up in the phases of treatment, there are more and more potential to target a big pharma company that actually is producing a drug commercially, which means thousands of patients, which is, of course, from a financial standpoint, from a tools provider perspective, a very lucrative business. Where Bio-Techne really fills in is around those tools and technologies and especially on the immune cell side. They have a portfolio that, as I mentioned before, is very much in the early discovery phases, while Bio-Techne has focused over the last years a lot around immune cells, which is the furthest along cell therapies today where CAR-Ts are used in second-line treatment in many countries globally. There, it's really a big gap that is getting filled and Bio-Techne also acquired Wilson Wolf or I think it's the acquisition is ongoing. It was announced a couple of years back that they will acquire Wilson Wolf with the G-Rex Bioreactors, too, which today is used widely for cell and gene therapy companies to produce the cell therapies. Together, yes, I think that is where Merck is seeing a big potential really.

Apart from the cell therapy manufacturing side of things, it's also the whole QC analytical piece where Bio-Techne has a pretty broad range of offerings that are used for everything from discovery, but all the way to quality control of cell and gene therapies with the quantifying the Elisa, the ProteinSimple platforms. I think it's really a nice complement to Merck.

[[00:05:47]]
How do you evaluate the capacity of the transaction to strengthen Merck's core discovery, translational development and downstream manufacturing capabilities?

[[00:05:59]]
I think it is strengthening also the core of what Merck has been doing in the past with, I would say, especially around the ProteinSimple platform. Merck already has some tools and technologies around Elisa, where our R&D Systems, Bio-Techne is probably the stronger player, while they are the stronger player. They've been around for a very long time and see themselves as gold standard when it comes to the whole protein portion. I think it's strengthening also that side for Merck, the whole discovery portion.

[[00:06:45]]
Does the transaction essentially insulate Merck from cross-border geopolitical tensions and volatile tariff lines by anchoring a more robust manufacturing footprint within the US?

[[00:06:59]]
That's definitely an interesting thought that I think a lot of companies do look at today with the volatile market and potential tariffs and all those things, so I think it could be attractive. I don't know where Merck is producing their proteins today. There is some unknowns on my side, but with Bio-Techne having their manufacturing facility in the US, in Minnesota, definitely, that's a big advantage. I think there's other advantages than only tariffs to have full footprint both in Europe and in the US with the whole geopolitical situation that we are in. Definitely broadening the footprint from going a little bit out of Europe and into the US, it's probably a well thought-through decision from the team at Merck.

[[00:08:08]]
How do you think the acquisition will ultimately alter long-term market competitive dynamics and Merck's broader market positioning relative to competitors such as Thermo Fisher and Danaher?

[[00:08:23]]
I don't think it will alter the market too much. Of course, from a customer perspective, you will be able to buy more things from one single source in a very similar way as you can with Thermo or Danaher today. Those two have really been pushing this along for many years, making sure you acquire a lot of also semi-big to even large corporations and put those under their wings. I see this as there's a third player that clearly wants to play in the discovery all the way to manufacturing cell and gene therapy platform with Merck moving forward with this large acquisition. From a competitive standpoint, there are still multiple pretty big players. I don't see that they will alter too much or push prices up. Prices are still and will remain probably high in this space.

[[00:09:38]]
What would you anticipate the leading structural risks and integration pressures to be during the first 12 months of the acquisition?

[[00:09:51]]
I'm sure it's going to be a lot of, I don't know how to put it. There will be some tension to put everything under one brand, but I think they have started though. Over the past year, they started branding all their companies to Bio-Techne rather than the brand name that the company came with, which was their earlier strategy. I guess that is also paving the way to get into Merck and the Merck brand. I can see some potential synergies with having local sales teams. Merck has a bigger sales organisation, they're saying without knowing all the details, but I think they are larger and in that way, also have more access points throughout the globe. I'm sure they will leverage several of the access points that Bio-Techne has and also some of the warehousing solutions that are around. There are synergies there that they can use.

I would be surprised if they are not starting to streamline their sales teams to add on more to each, but keeping their best team players and their best sales leads and really streamlining the organisation around that and also the customer support portion. It would be interesting to see how they solve the logistics around the two companies and if those two are getting merged or kept more or less intact. I foresee that this will take some time to fine-tune and have final decisions on. I would assume that there is some leveraging going on from both entities and streamlining that will be happening.

[[00:12:05]]
How realistic is Merck's three-year target of EUR 140m in annualised cost savings? Where do you anticipate the most visible back-office redundancies?

[[00:12:20]]
This is, of course, without having the full view of how they are counting these EUR 140m. I think potentially that is a doable target with reduction of headcount and also streamlining of warehousing capabilities to not double up, but really to have one streamlined approach. I think there's definitely some redundancies that will happen. Both companies have local entities, so they're like regional offices. I'm sure there will be some restructuring of regional offices to decrease the back office team and maybe leverage more of the Merck back office access and have redundancies on the Bio-Techne side. Those are pure guessings on my side. Without having the full view and insights into the plan, it's difficult to see, but I think it's a doable target.

[[00:13:46]]
How cleanly can Merck merge its legacy MilliporeSigma sales channels with Bio-Techne's advanced therapy teams without disrupting client relationships?

[[00:13:58]]
This is a million-dollar question. I think that will be tough to add on more to the Merck team. We have to keep in mind that the sales are a little bit different from how you're selling into preclinical academic research into more late-stage companies. I think they will need to keep some of their Bio-Techne teammates. Also when it comes to the instrumentation portion, instrument sales, that's a very different sale than a reagent sale. Our instrument specialists will probably stay safe for a little while. From a customer perspective, I think it's probably going to be easier to just buy from one than two. I would assume that many of those who are buying from Merck today could be buying from Bio-Techne, too. Not saying that they are, I'm sure Merck has a bigger reach than Bio-Techne, in general with them being around for a little bit longer and having a little bit more of a diverse portfolio.

[[00:15:20]]
Where would you say are the most immediate geographic overlaps between MilliporeSigma and Bio-Techne's teams?

[[00:15:33]]
What do you mean with geographical? Are you thinking of the actual portfolio or the actual locations?

[[00:15:42]]
Actually both.

[[00:15:46]]
Okay. Yes. I think there is definitely a small overlap. If we look at the portfolio, there are some overlapping technologies like Elisa, for example, both companies have antibodies for Elisa. potentially, there are some pieces of the portfolio that will get in, in favour for the one or the other companies' portfolio, picking the strongest, most profitable candidates. In general, looking at the overarching big picture portfolio, it's pretty complementary, so they don't have a lot of overlaps. It's more on the complementary end. Looking at the geographical side, I would assume that Merck is stronger in Europe and Bio-Techne is stronger in the US with their sales teams, considering where the companies originate from. Leveraging some of the US sales team from Bio-Techne would probably make sense while Merck most likely will absorb a lot of the work from the European sales team. Potentially, we could be significantly on the European side.

[[00:17:23]]
How aggressively will more lean, non-integrated tools competitors seek to exploit the sales force restructuring window to capture at-risk accounts?

[[00:17:39]]
Yes, that's a great question. It's a good opportunity and especially if, just thinking of it, if we are talking about the protein side of things where Bio-Techne is selling a lot of growth factor cytokines into developers and also commercial accounts, if the sales team is getting laid off from Bio-Techne and being replaced with a Merck's team. There is a huge opportunity that will be taken advantage from competition as the sales for these especially larger accounts and larger higher-value products is very tied to the people who are working. Of course, not completely, but there is a strong relationship portion that is there. If the team member is getting laid off, that opens up the door for another skilled sales rep to potentially take the business depending on which state the business is in. There's a lot of reasons to stay and a lot of reasons to potentially look somewhere else, so it will highly be dependent on how the transition is handled, how the account transition is done, the strategy for the account transition from the Merck team if they are planning on having key account managers or just bulk selling from more an inside sales team that will have an impact.

Merck has a lot of opportunity to keep the accounts and continue selling to them even if the Bio-Techne sales team is getting obsoleted. However, they need to put a strategy in around it to not potentially lose business. Definitely, there are some other players that will push for the business as this is happening. If they have a really good strategy and a good communication within the companies, they are decreasing the risk of losing business while if they don't, I would say there is a high potential.

[[00:20:41]]
How long will the operational window take for Merck to cleanly absorb Bio-Techne's lot-controlled inventories into its automated distribution network?

[[00:20:53]]
I'm sure that's going to take quite some time. You're talking about a lot of products, so I'm sure there is a lot of work from a lot of team members to make that happen. I don't envy those team members, that's going to be a lot to also get everything right and into sellable inventory. That's not going to happen in the next six months. That's probably a longer time span than that. I don't know if there has been a communicated transition period, but I would assume that at least a year is reasonable to move everything over, merge customer databases and all those things that needs to happen to actually have a functional business in one location rather than two or several. Yes, I think it's going to take some time. That's definitely the path.

[[00:22:07]]
Could you discuss the main physical safety risks or shipping bottlenecks that occur when moving the lot-controlled biological reagents out of independent warehouse centres and into automated high-volume shipping spaces?

[[00:22:23]]
Yes. I'm not a logistics expert, but I've spent some time in warehouses. There is definitely a big advantage of having high-volume automated centres compared with lower volume and more manual picking of products. There are some things to consider. The research reagents are very straightforward. However, Bio-Techne is also producing GMP reagents, which need separate treatment and potentially also be staying in separate areas. I don't think that's something that Merck has been doing in the past. There is, for sure, some looking into options and capabilities from there end. They've more standardised reagents and equipment and then we are more talking about temperature-controlled locations and freezers, fridges, and temperature-controlled areas. That should be pretty straightforward. That's more of a making space, making locations work. Still I can't see that that is done over a week or a month. That's probably still within a gradual move that will take 6-12 months.

[[00:24:12]]
How significant an efficiency unlock is it for Merck to convert Bio-Techne's decentralised brand network into a single standardised database?

[[00:24:28]]
I've always been puzzled about the centralised vs decentralised brand network and there are definitely the pros and cons, but moving everything into centralised is definitely the easiest part for Merck, but I don't know if it's all that easy with products being recognised under their brand names, so ProteinSimple and R&D Systems. They are so established, so moving them to Merck, it's potentially a little bit disruptive too for those products. If customers know them by R&D Systems or ProteinSimple, it's not that easy to rebrand it and keep the connection. There is definitely risk associated with it. Why would a company or an academic centre start buying Merck cell therapy cytokines when they know that R&D System cytokines works well. If they don't add one and one together, there could be a potential problem that they don't want to buy Merck proteins because they have no idea about the history of Merck proteins. There is definitely a lot of marketing that needs to happen from the Merck side if they are going to incorporate all the big brands and big well-known brands that have been around for 20-30 years, while there are Bio-Techne brands that are new, not that well known, that may be easier to incorporate because of where they are in their state of evolution. Yes, I'm looking forward to seeing how this pans out, but it will definitely be interesting.

[[00:27:05]]
Do you think the old, decentralised brand network from Bio-Techne creates unnecessary back-office load? How cleanly do you think Merck's centralisation will essentially unlock further efficiency?

[[00:27:23]]
Yes, definitely. That's definitely a lot of redundancy with having all those brands and in many cases, keeping the manufacturing locations and the whole back-office team that is associated with the manufacturing site. There is definitely a big potential to streamline people, production facilities and all those things to decrease the headcount and to make it more efficient. Then also knowing that it's not that easy to move facilities to… You can remove people, but they are there for a reason. Of course, when it comes to the logistical part, those team members are fairly easy to replace with logistics hubs, etc, but manufacturing plant is something different. I'm sure they will start moving to more centralised locations, at least some of the manufacturing, but that's also not done overnight. That's also probably a 1-2-year plan to start incorporating some of these efficiencies. I'm sure they will move ahead. They will do it. They will be successful, but it will take time before they really see the full return on investment on those activities.

[[00:29:13]]
How effectively does the acquisition expand the commercial reach of Merck's Process Solutions business unit into higher-value bioprocessing reagents, analytical assays and advanced cell therapy workflows?

[[00:29:29]]
This is exactly where Bio-Techne comes in. I've seen Merck around on events, conferences and the cell and gene therapy space. Not really that, they haven't really been that active. They don't have all the tools and technologies now. They are adding in a very large portion of tools in reagents, both on the manufacturing side, but also on the analytical side. Cell therapy is known for a high revenue, to be a high profit segment. Of course, that is what is attractive for them with the Bio-Techne acquisition with Bio-Techne having focused a lot on cell and gene over the past, I would say, 6-7 years with also being part of the joint venture ScaleReady, which completely was focused on cell and gene utilising both the protein workflow, but also the Wilson Wolf bioreactors that later got acquired by Bio-Techne. That will be absorbed by Merck, I assume, without knowing all the details of those deals. Definitely, that is why they want to play here to gain those higher profits, better margin and sell into this space where also if you get into a therapy and you sell products, so if it's bioreactors or proteins and you sell into a manufacturer of a cell therapy that has a large indication like AML or multiple myeloma that are big indications today.

We are not talking about 5,000 or 10,000. We are talking about 100,000 patients a year that these companies are envisioning treating in the coming 2-5 years. If you're selling into such a segment, you know that your products will continue being used. It's unlikely that anyone is switching them out. If you are getting into such a segment, you have a pretty steady cash flow stream, which is what I think Merck is envisioning that could be happening. Definitely, the cell and gene market is highly attractive here. I spoke about the manufacturing, but that also includes the analytical side with the analytical tools and technologies, so not only do you need to produce the cell therapies, you need to test them too, to ensure that they are functioning that they are safe for the patient to receive back. That's also a big space where Bio-Techne is playing. With additional therapies coming on board, there could be additional revenue streams that Merck is envisioning.

[[00:33:33]]
How fast do emerging biotech capital constraints filter down into raw catalogue reagent purchase drops on the ground?

[[00:33:51]]
I would say yes, it happens pretty immediately. Over the past couple of years, there has been a big constraint on the financial side for biotech companies, especially on the discovery side, but not only also on the manufacturing of some of this early cell therapy. Last year, at about this time or a little bit later in October, FDA basically shut down a lot of programmes by saying that, "We don't want another me too cell therapy that is already commercially used if it doesn't hold a big advantage compared with the current therapies." That put a lot of programmes to bed. That also opened up the door, so we could see last year that a lot of companies actually laid off people, they closed down parts of their facility because some of their later-stage programmes were one of these new products. However, that also moved for more innovation. Right now, even though there is a restriction in funding, there is still more innovation happening.

Companies are betting on one or two horses to take them to a potential commercial state, but in the background, they are working on some more innovations, which is really potentially going to reform and reshape the industry a little bit with more companies coming in with more innovative treatments, which is potentially meaning that there are more treatments for a bigger patient pool, so more indications that can be treated long term. This is, of course, a very serious long process. It's not an overnight thing. If you look like five or 10 years from now, that will impact and it will impact in a positive way where we will actually see therapies that are efficient for new indications or completely new ways of treating diseases. This is also then evolving the products that companies will offer to these clients. There is always this feedback reinforcement of discovery leading also to new product development with companies. There is a potential for some additional developments happening also by Merck and Bio-Techne down the line throughout this whole ecosystem. Is that what you're looking for?

[[00:37:31]]
How can a combined field team differentiate a customer's short-term inventory destocking cycle from a structural contraction in their underlying therapeutic pipeline?

[[00:37:51]]
How can the combined field team help support? There's not much a field team can do apart from actually being out there and talking to customers and feeding back to the company. I don't see that a combination of the field teams is actually an advantage there. The combination of the field team is more the advantage of the total knowledge of the team that the customer is meeting with to ensure that they can actually have the stock that they will need down the line. As I see it, that's a redundancy that Merck probably will want to get rid of and have field team members who are more dedicated to sell into one specific account and potentially covering more products for that field team member to ensure that the customer has a good connection and good relationship with the company. Right now, there will probably be two field reps going in, but that is a phase that I don't see that continuing. It's just a fee.

[[00:39:25]]
How effectively does expanding the multi-product catalogue prevent clinical stage cell therapy accounts from multi-sourcing Merck's core biological inputs?

[[00:39:36]]
Having a bigger catalogue definitely, it will be more efficient for the customer. It means that they can talk to maybe one company less and ensure that they will still get everything they need from one company, but they will still want to and need to multi-source some of their products. How the multi-sourcing usually works is that… For instance, I want to say that, I don't think there is one product that they are sourcing from both of these companies that they have one is primary and one is backup. There are a handful of products where there's a potential, but I would say it's still rather unlikely, so they would have their primary vendor. It was already mentioned here with Thermo or Cytiva, it could be them or there are plenty of companies out there where you can source some of your core biological inputs like proteins. The customer will have their primary vendor, which is tested and they know works and it's like a reliable partner that always delivers that holds stock for them that ensures that they don't need to have everything on shelf in their own facility, but can have it at the warehouse with the company.

Then they will have a second supplier that they also have a good relationship with. They may be buying other products from them, too. From a biological standpoint, their product is equal or at least they can work with it and they will have the same results, so they will have them as a backup or secondary vendor. From that vendor, they will not buy all that much. It will only be in case of, I wouldn't say emergencies, but in emergencies, they will buy some of their products to ensure that they always keep up-to-date and now it's like amounts to add and biological activity that everything is functioning, but they will use their main vendor for all their big orders. I don't see that the multi-sourcing will change. Their multi-sourcing strategy will remain.

[[00:42:37]]
How significantly does shifting a customer from spot buying to a multi-year locked GMP [Good Manufacturing Practice] contract expand out-year revenue visibility and insulate against long-term vendor churn?

[[00:42:54]]
That is definitely something companies want to do, but this is complex. Usually, vendors, they sign up multi-year supply agreements with their largest customers. From a customer standpoint, it means that they have ensured that there is always stock that they get informed if something is changing or happening, but it also means that they sign up to purchase a set amount of proteins each year. That is depending on contract, it could be like plus/minus 10-25%, but it's still a pretty significant amount that they are signed up to buy. From the vendor perspective, it means that the revenue stream is there. You will get your money as long as you can, but you are also obliged to deliver proteins to the amount that the agreement is signed up for. It means that you need to ensure that you don't have any issues with manufacturing. You're not planning on a large change because if you do, you need to add additional change controls, etc. For both parties, signing up to a multi-year supply agreement means benefits and risks. Usually, it's only those companies who are into commercial stage manufacturing that will sign up for a multi-year supply agreement.

Usually, the companies only want to have those sign up too because in case of any shortages down the line, they can shift their stock to go to that specific or those specific accounts rather than to sell into every single small academic account who places an order. Usually, you can see it, but it's also only the largest accounts, the largest streams that are there. You can see this as the 80/20 rule. The 20% of accounts or even less that is generating 80% or more of the revenue. Those are the accounts you want there. For the rest, you probably don't want to have them on supply agreements because their purchasing patterns are so unpredictable. They may be doing a lot over the next 1-2 years. Then maybe they are not doing anything while they are analysing data while they are getting ready for their next phase in their clinical trial, and that may be a year where they're basically not utilising anything or at least very, very small volumes, so they don't want to be tied up to an agreement where they have to place orders during that time.

That's why they don't want to sign up in the same way as companies only want to have those sign up who is committed, who will continue buying for multiple years. With those accounts, it's great because you have a very clear view on your revenue stream. You have agreed on prices, not only for this year, but for multiple years ahead. You know exactly what the revenue stream will look for the coming three years or five years depending on how long your contract is up for.

[[00:47:00]]
Once a customer account accepts a multi-product unified bundled package, how insulated is that account from outside vendor displacement throughout the multi-year manufacturing life cycle?

[[00:47:14]]
Yes. I would say with a good customer relationship and white-glove treatment, they are pretty set. The relationship is there. They will buy their bundled products, and they will continue until they get unhappy and they can get unhappy for a big variety of reasons. As soon as they are unhappy, like it could be small things as shipping delays or a third-party shipping dealer who is not delivering on everything. It can be things that are within the company's control and also things that are outside of the company's control or with their sales rep, the sales rep is not responsive or doesn't support them in the best way possible, they don't understand what they are doing. Maybe the sales rep doesn't understand the full scope of the bundle and all the products that are in, then it's at risk.

Maybe not tied up as formally as in a multi-year supply agreement, but still with a bundled deal that is running for this year and with the intention to be prolonged, there are definitely risks of moving those customers to another vendor if the other vendor comes with an equal offering and better support. Support is sometimes underestimated in the world of selling. Generally, if you have a good support, you have a good team of the account, you are treating them with white gloves. They are getting the information they are seeking. They have no reason to move as long as the products continue performing in the same way as they did to start with.

[[00:49:30]]
How do proprietary patent-protected proteins with enhanced bioactivity provide actual leverage to push through premium pricing on high-volume catalogue lines?

[[00:49:44]]
Yes. Of course, if you have something that is extraordinary compared with the regular catalogue product lines, that is an advantage. There are very few of those examples of catalogue products that are enhanced to be so much better than anything else that there cannot be a reason to switch over. There are many other reasons to switch or not switch. Yes, IP protected like proteins that has a small feature that is better or at least said to be better, that is also in the eyes of the beholder who is saying that it is more advantageous to use the one or the other product. The customer will test and they will judge if it's truly better, they will keep going with it, but if it's equal, which is often the case, they will stay or potentially switch. It's a little bit vague. I don't see a reason why they would switch or not switch unless they haven't properly tested.

[[00:51:30]]
How cleanly can Merck use the combined portfolio to capture late-stage clinical development budgets, given that early discovery funding dropped to 18% of total emerging biotech spend?

[[00:51:45]]
Yes, we can come back to the selling portion, leveraging the products at hand from Bio-Techne, which is there to potentially capture some of the late-stage companies that are today not utilising the reagents or the analytical tools that Bio-Techne has to offer. I definitely see that there is a potential. I would add that it's not always very easy to move a customer, especially not a late-stage customer from their current protein vendor to a new protein vendor unless there are some significant benefits for them. Proteins, that's one of the more difficult lines to move customers. The only reason that a customer will move from their current vendor to a new is if they are unhappy. In that case, there is definitely a potential to move. Yes, we talked about the fact that there has been a significant drop already in the spending for early research, but there is still a market there. There is still spend to be taken. I don't think there is a reason for Merck not to capture a big part of the market that is out there. There is definitely still potential to grow both the late-stage clinical, but also the discovery portion.

Merck has an advantage that they are in many of the early accounts already. Leveraging current relationships is definitely their advantage. Bio-Techne is also in a lot of early and later-stage accounts with one or the other part of their portfolio. Here, the combined sales force and moving everything under one brand may be a big advantage for Merck because currently also the sales teams or at least that's how it used to be the sales teams were not fully aligned as Bio-Techne of the different brands have their own sales teams. In that way, cross-selling may not have been the most efficient. That can, of course, have changed over the last years. Utilising what is already sold into the accounts and leveraging current relationships will be the way to go for Merck.

[[00:54:56]]
Regarding switching friction, how effectively can Merck leverage Bio-Techne's localised footprint to capture China's exploding domestic demand for ADCs [antibody-drug conjugates] and autoimmune therapies?

[[00:55:08]]
Yes. This is an interesting one. I noticed that Merck also have an entity in China. China is a special market where often brands are not sold, like you were not selling directly to a customer in China. You have a set of distributors in between. There, the bigger question is who's got the best distributors. Maybe there are ways of leveraging the distributors selling strategies, but I don't foresee that Merck or Bio-Techne has their local team on the ground actually selling into accounts without knowing the details, but that's usually how it's sold in China where you are selling to a larger distributor who then has under distributors. It is an exploding market though, so it's a very interesting market to be in, but I cannot say how efficient this will be.

[[00:56:25]]
What operational and assay validation obstacles prevent a cell therapy lab from switching raw biological inputs mid-trial?

[[00:56:35]]
This is a great question. There are so many barriers from switching mid-term. What the researchers has to show is that the cell therapy in this case have to perform identical like if you're changing raw materials, you cannot change anything in the end. The cells needs to perform exactly the same. There is always some minor changes happening in a cell culture if you change raw materials or containers. This is the tricky part. They will have to do full batch runs with their cells. They need to fully test them. They will start at small scale, but they will need to prove it at manufacturing scale. The reason that they are not moving is cost because manufacturing at scale is costly.

[[00:57:50]]
Regarding Merck's platforms and overall equipment strategies, how effectively will gaining access to Bio-Techne's ProteinSimple instrumentation library and multi-omics spatial lines bolster the company's long-term competitive positioning, especially within digital pathology and translational diagnostics?

[[00:58:11]]
Yes, I think it really will. Bio-Techne has a pretty broad offering and is also very good at custom reagents and that could, of course, down the line, a custom reagent can become a catalogue product if it's more than one company who wants to use it. I'm pretty convinced that it will boost Merck's long-term competitiveness within the diagnostics space and also the digital pathology where they can really test and have a broader library with Bio-Techne's portfolio.

[[00:58:55]]
Is there anything else you'd like to highlight about Merck, especially regarding the acquisition and future risk to take into consideration?

[[00:59:11]]
No. I think we are pretty good. It's definitely an interesting acquisition to be followed and see where this lands in the total landscape for Life Sciences.

[[00:59:29]]
Okay. Great. Thank you for that. I just wanted to say thank you for hopping on the line as well and all of your insight. Hopefully, we can work together again in the future.

[[00:59:40]]
Thank you. Thank you so much for giving me the opportunity to speak with you today. I'm looking forward to hearing more.

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