Thermo Fisher Scientific Inc. has agreed to acquire PPD Inc., a provider of clinical and research services to the pharma and biotech industries, for $17.4 billion as healthcare deal making soars amid the pandemic.

Thermo Fisher will pay $47.50 a share for PPD, according to a statement Thursday, and will assume about $3.5 billion of net debt. The price represents a premium of about 24% to the PPD closing price Tuesday, before reports of a possible deal.

Companies like PPD that offer clinical research services, or CROs, help run the studies that get experimental drugs to market, a crucial part of the typically invisible infrastructure. Thermo Fisher has become a major player in the pandemic as a top producer of diagnostic test kits for Covid-19 as well as laboratory equipment and supplies. The PPD deal allows the company to provide a larger suite of services to its customers.

“The acquisition of PPD is a natural extension for Thermo Fisher,” said Marc Casper, chairman and chief executive officer of Thermo Fisher, in a statement.

Shares of Thermo Fisher gained 2.2% to $488.48 at 9:39 a.m. in New York trading, while PPD rose 7% to $46.01.

The drug-testing field has become a hotbed of activity as companies worldwide seek to roll out new Covid-19 drugs and vaccines, even as they continue to develop new cancer therapies and other treatments. With Covid-19 case numbers remaining high worldwide, and rising concern about future pandemics, the value of CROs is growing.

PPD has worked with Gilead Sciences Inc. on studies of the Covid drug remdesivir and on research involving Roche Holding AG’s Actemra as an arthritis treatment, according to its website. PPD also offers laboratory services.

“PPD is one of the largest contract research organizations, with scale in clinical, preclinical and central lab end-markets.” said Jonathan Palmer, health-care analyst “The marriage of PPD with Thermo’s Patheon manufacturing unit would create a compelling end-to-end offering for biopharma customers, with compelling financial metrics.”

Meanwhile, health-care deal making overall has been on a tear, with companies announcing more than $160 billion of transactions this year, almost three times the volume in the same period of 2020. In February, Icon Plc agreed to acquire PRA Health Sciences Inc. in a contract-research deal valued at about $12 billion.

PPD was taken public by investors Carlyle Group Inc. and Hellman & Friedman in February 2020. The two private equity firms are still its largest shareholders, holding 38% and 16% of the stock respectively, according to data compiled by Bloomberg.

Barclays Capital and Morgan Stanley served as financial advisers to Thermo Fisher. JPMorgan Securities is the exclusive financial adviser for PPD, and Simpson Thacher is its legal adviser.