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PharmSource - M&A in the CMC Services Industry: Implications and Outlook

PharmSource - M&A in the CMC Services Industry: Implications and Outlook

Summary

According to the latest PharmSource Trend Report, M&A in the CMC Services Industry: Implications and Outlook, in the three-year period 2014-2016 there were 101 acquisitions of CMC services companies, including dose and API manufacturing, packaging, logistics, formulation and analytical services. Nearly 80% of buyers of CMC services companies were strategic buyers, i.e., they were operating companies rather than investment firms. A number of CMC services companies changed hands coincident to the purchase of their parent company, while several CMOs were acquired by bio/pharma companies seeking to secure product supply.

The 101 transactions include 96 in which the CMC services business was the target, and 5 in which the services business was part of a larger entity that was acquired for reasons other than the services business. Only 25% of the targets had revenues greater than US$100 Million; most targets were small companies. Contrary to the popular impression, little industry consolidation has resulted from M&A.

CMC service providers, mostly manufacturers, acquired 31 manufacturing fa¬cilities and laboratories during the 2014-2016 period, mostly from global bio/ pharma companies. M&A has not resulted in significant consolidation in the CMC services industry. In each of the major service segments, less than 8% of companies and segment revenues were consolidated as a result of M&A.

Private equity firms have become buyers of last resort in most cases. M&A activity in the next several years will be impacted by some strong headwinds including higher interest rates, uncertain trade and investment policies, high valuation expectations and sizeable debt loads carried by some of the most active acquirers.

The report PharmSource - M&A in the CMC Services Industry: Implications and Outlook analyzes merger and acquisition (M&A) activity in the CMC services industry during the period 2014-2016 and assesses the implications for buyers and sellers of manufacturing, packaging, formulation and analytical services. Moreover, it analyzes how M&A in the bio/pharma contract services industry is likely to play out over the next two years. It examines which capabilities are likely to be most in demand by acquirers and which companies are most likely to be targets.

Scope

  • According to the latest PharmSource Trend Report, M&A in the CMC Services Industry: Implications and Outlook, in the three-year period 2014-2016 there were 101 acquisitions of CMC services companies, including dose and API manufacturing, packaging, logistics, formulation and analytical services. Only 25% of the targets had revenues greater than $100 million; most targets were small companies. Contrary to the popular impression, little industry consolidation has resulted from M&A.
  • M&A in the CMC Services Industry: Implications and Outlook analyzes how M&A in the bio/pharma contract services industry is likely to play out over the next two years. It examines which capabilities are likely to be most in demand by acquirers and which companies are most likely to be targets.
Reasons to buy
  • CMOs: market trends, strategic planning, competitive intelligence, performance benchmarking
  • Bio/Pharma: supplier performance benchmarking, market trends, competitive intelligence
  • Private equity and Stock analysts: target identification and analysis, portfolio company performance benchmarking


  • Executive Summary
  • Objectives and Methodology
  • Overview of M&A Activity 2014-2016
    • Table CMC Services Businesses Acquired as Part of Larger Deals
    • Target Characteristics
      • Table Figure 1 Company Acquisitions 2014-2016 by Target Service Offering
      • Table Figure 2 Company Acquisitions 2014-2016 by Target Revenues
      • Table Figure 3 Company Acquisitions 2014-2016 by Target Ownership
      • Table Company Acquisitions 2014-2016 by Target Service and Size
      • Table Company Acquisitions 2014-2016 by Target Service and Ownership
      • Table Company Acquisitions 2014-2016 by Target Market Scope and Size
      • Table Figure 4 Acquisition Targets by Sophistication of Capabilities
    • Buyer characteristics
      • Table Figure 5 Number of Acquisitions by Buyer Rationale
      • Table Figure 6 Number of Acquisitions by Buyer's Core Business
      • Table Figure 7 Number of Acquisitions by Buyer Ownership
      • Table Most Active Acquirers 2014-2016
      • Table Figure 8 Number of Acquisitions by Principal Buyer Motivation
  • Segment Close-Ups of M&A Activity 2014-1026
    • Dose Manufacturing
      • Table Figure 9 Dose Forms Manufactured by Acquired Dose Manufacturers
      • Table Acquisitions of Dose Manufacturers
    • Biologics APIs
      • Table Acquisitions of Biologics API Manufacturers
    • Small Molecule APIs
      • Table Acquisitions of Small Molecule API Manufacturers
    • Analytical Services
      • Table Acquisitions of Analytical Services Providers
    • Formulation and Clinical Supplies Manufacturing
      • Table Acquisitions of Formulation and CTM Providers
    • Packaging and Logistics
      • Table Acquisitions of Packaging and Logistics Services Providers
  • Valuations
    • Table CMC Services Deals with Known Transaction Value and Multiples
  • Facility Acquisitions
    • Table Figure 10 Bio/Pharma Facility Acquisitions 2014-2016
    • Table Facility Acquisitions by CMOs 2014-2016
  • What It Means
    • Table Number of Deals by Buyer and Target Service Offering
    • Table Acquisitions by Private Equity Firms 2014-16
  • The Outlook for M&A in CMC Services
    • Table Service Providers Owned 4+ Years by PE Firms
    • Table Potential Targets: Biologics API Service Providers
    • Table Potential Targets: Gene and Cell Therapy Providers
  • Appendix
    • CMC Services Acquisitions 2014-2016

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