KBS - Pharmaceutical Consultancy and Life Sciences - Market Insight

MARKET INSIGHT – PHARMA CONSULTANCY AND LIFE SCIENCES

M&A ACTIVITY CONTINUES TO RISE WITHIN THE PHARMA CONSULTANCY INDUSTRY

The UK pharmaceutical consultancy and life sciences industry is experiencing remarkable growth, with mergers and acquisitions (M&A) activity on the rise. This encompasses specialist providers supporting pharmaceutical companies, medical device manufacturers, biotechnology firms and healthcare organisations. Our extensive experience in managing successful transactions, allied to our ongoing engagement within this dynamic market, has provided us with a unique perspective. We have conducted an in-depth analysis of the company sales landscape within this sector, offering valuable insights into the key trends shaping sales activity. This includes the strategic moves of leading acquirers and the vital role of private equity in driving industry consolidation. We present significant industry transactions, highlighting notable deals and market dynamics that are reshaping the competitive landscape, along with a detailed overview of completed transactions facilitated by KBS Corporate, offering a practical look into real-world M&A examples within the pharma consultancy space.

CURRENT ACQUISITION TRENDS

Acquirers are targeting companies in order to:

• Enhance their core responsibilities and increase regulatory knowledge • Achieve faster, more efficient entry to market for products

• Capitalise on the growth of personalised medicine • Benefit from the growth of pharma services companies • Achieve consolidation

The most recently available government data showed the biopharmaceutical service and

supply sector increased by 13% to £23.5billion per annum , whereas the core biopharmaceutical increased by only 7% on the previous year to £40.8billion.

CURRENT LANDSCAPE

‘BIG PHARMA’ GOES ON A BUYING SPREE

‘Big pharma’ companies have emerged as especially hungry buyers within the last couple of years, whereas the previous trend featured strong acquisition activity from aggressive mid-sized firms.

The pharma consultancy market has continued to experience high levels of interest and an increase in M&A deal volume. Opportunities abound for a whole range of pharma service providers at various stages of the development process, from contract research organisations (CROs) to specialist communication firms. They have become coveted acquisition targets for trade buyers and investment funds. Private equity acquirers see the opportunity to capitalise on the expanding range of pharmaceutical markets. Currently, the space comprises many fragmented sectors, and such investors aim to consolidate and to develop comprehensive, efficient companies. Moreover, trade buyers seek to internalise their consulting processes with in-house access to expertise and knowledge, for example to navigate the complex regulatory landscapes.

KEY TRENDS

Enhanced core responsibilities: For example, an increase in regulatory knowledge, as evidenced by Clinigen’s acquisition of Kinesys Consulting. Recent acquisitions and investments can be viewed as strategic manoeuvres that reshape the industry landscape, foster innovation, expand research capabilities and increase market competitiveness. This enabled Clinigen to fuel its mission of accelerating the development and delivery of life-saving treatments to patients worldwide, guiding clients through regulatory strategy and execution for drugs and medical advice, as well as having access to a high-quality medical/regulatory writing service. Over the last 10-15 years, the cost of developing new products has continued to increase, in line with stringent regulatory practices. This means failure to gain approval from a regulatory authority can incur a substantial cost. Growth of personalised medicine: Pharma companies are looking to become leaders in this sector, particularly as an increasingly ageing population triggers a greater focus on speciality therapeutics and rare diseases. Precision medicine, which has more than 3,500 drugs in development, will remain a focal point for pharmaceutical innovation. Investment into the pharma consultancy space is motivated by opportunities to leverage these technologies, to accelerate timelines and reduce outsourcing costs. Services growth outpaces core industry: Pharma service companies show significant growth compared to the core biopharmaceutical sector. The most recently available government data showed the biopharmaceutical service and supply sector increased by 13% to £23.5billion per annum, whereas the core biopharmaceutical increased by only 7% on the previous year to £40.8billion. Accelerated time to market: In-house pharma consultants help to streamline operations and achieve faster approvals and efficient market entry.

Consolidation: ‘Big pharma’ arose as a major acquirer within the pharma services space in 2023. The preceding trend was characterised by strong buying activity from aggressive mid-sized firms.

EBITDA MULTIPLE RANGES IN THE PHARMA CONSULTANCY SECTOR

In recent transactions within the UK pharmaceutical consultancy and life sciences services sector, EBITDA multiples have typically ranged between 9x and 14x, depending on various factors such as the service offering, market positioning and client base stability.

Key drivers for higher multiples include:

• Regulatory and clinical consulting services: These niches see multiples closer to 11x-14x, given their critical role in ensuring compliance and advancing drug development.

• Technology and data-driven services: Firms specialising in digital health, AI-driven analytics and medtech implementation often command premium valuations within the range.

• Recurring revenue models: Companies offering subscription-based solutions in regulatory software, trial management platforms or technology services achieve multiples at the higher end.

Strategic acquisitions by private equity firms and global players are contributing to consolidation, with businesses offering unique service capabilities or addressing high-growth verticals commanding the most significant premiums.

FACTORS DRIVING HIGHER VALUATIONS AND EBITDA MULTIPLES IN THIS SECTOR

The valuation of companies within the pharmaceutical consultancy and life sciences services sector is influenced by multiple factors that reflect their long-term revenue potential, operational strength and market relevance: 1. RECURRING REVENUE MODELS Companies with subscription-based platforms, long-term contracts for regulatory compliance or clinical trial monitoring services enjoy predictable cash flows and lower revenue volatility. Firms with 70-90% of revenue in recurring models are particularly attractive to buyers. 2. FOCUS ON HIGH-DEMAND SEGMENTS (DIGITAL HEALTH, CLINICAL TRIALS, REGULATORY COMPLIANCE) Businesses specialising in areas such as digital health solutions, patient-centric trial design and compliance with evolving global regulations (e.g., MHRA, EMA) are highly valued due to the growing demand for these capabilities. 3. SCALABILITY AND GROWTH POTENTIAL Investors seek firms with scalable platforms, such as those leveraging advanced technologies (AI, data analytics) to drive efficiencies. Companies positioned to expand regionally or integrate into larger ecosystems often achieve higher multi-ples. 4. OPERATIONAL EXCELLENCE AND PROFITABILITY Efficient operations with strong EBITDA margins signal sustainable profitability. Firms excelling in cost control, automation and streamlined project delivery are better positioned for premium valuations. 5. SPECIALISATION AND DIFFERENTIATION Firms serving highly regulated or complex niches, such as oncology, rare diseases or biosimilars, tend to command higher valuations. Deep expertise and tailored service offerings help differentiate businesses from broader consultancies. 6. PRIVATE EQUITY INTEREST AND CONSOLIDATION TRENDS Private equity firms and multi-national consolidators are actively acquiring niche firms, creating ‘platform plays’ that integrate smaller, specialised entities into larger, higher-value portfolios. This consolidation drives competitive valuations.

STRATEGIC INTERESTS OF PRIVATE EQUITY AND INVESTMENT BUYERS IN THIS SECTOR

Private equity and investment buyers have several strategic interests in the UK pharmaceutical consultancy and life sciences industry:

Recession Resistance: The life sciences sector is known for its relative resilience during economic downturns, which makes it an attractive target for private equity investments.

Predictable Revenue Streams: Companies in contract research (CRO), contract manufacturing (CDMO), speciality packaging, distribution and consulting offer predictable and forecastable revenue streams.

Buy and Build: Many private equity firms use a ‘buy and build’ strategy. This involves acquiring smaller, strategic companies and integrating them to achieve growth. Innovation and Development: Investment buyers are driven by the opportunity for innovation and tackling major health challenges. They see potential in the development of new treatments and technologies, reinforcing the UK’s position as a leader in global healthcare.

Government Support: The UK government has shown substantial support for the life sciences sector, making it a favourable environment for investors.

Strong Foundations: The UK’s strong universities, research base and the NHS provide a solid foundation for biotech and life sciences companies, making them appealing investment targets.

Overall, investors are attracted by the potential for growth, innovation and stable returns in the UK life sciences and pharmaceutical consultancy sector.

Within the UK pharmaceutical consultancy and life sciences services sector, EBITDA multiples have typically ranged between 9x and 14x

MOTIVATIONS OF TRADE ACQUIRERS AND CONSOLIDATORS IN PHARMA CONSULTANCY

Trade acquirers and consolidators are particularly interested in the UK pharma consultancy and life sciences industry for a variety of strategic reasons:

+ EXPANSION OF SERVICES Companies aim to broaden their range of services by acquiring other businesses with complementary capabilities, so they can offer more comprehensive solutions to their clients. + ENHANCED MARKET PRESENCE Acquisitions allow companies to gain a stronger foothold in new markets and geographic regions. This helps them increase market share and establish a more prominent industry presence. + PORTFOLIO DIVERSIFICATION By acquiring diverse assets and companies, consolidators can mitigate risks associated with reliance on a specific market or product. This diversification helps to create a more stable and balanced portfolio. + ECONOMIES OF SCALE Consolidation can lead to significant cost savings through economies of scale. By combining resources and reducing redundancies, companies can operate more efficiently and improve profit margins. + INNOVATION AND R&D Trade acquirers look for companies that bring innovative technologies and strong re-search and development capabilities. This helps them stay competitive and at the fore-front of scientific advancements. + TALENT ACQUISITION Acquiring established companies often means gaining access to skilled professionals and experts in the field. This talent acquisition is critical for maintaining a competitive edge and driving future growth. + STRATEGIC PARTNERSHIPS Consolidators seek to form strategic partnerships through mergers and acquisitions, which can result in mutually beneficial collaborations, sharing of resources and en-hanced technological capabilities. These strategic interests drive trade acquirers and consolidators to actively participate in mergers and acquisitions within the UK pharma consultancy and life sciences sectors, aiming for growth, innovation and improved operational efficiency.

WHAT TYPES OF BUSINESSES ARE STRATEGIC ACQUIRERS PURSUING?

Strategic acquirers in the UK pharma consultancy and life sciences industry often target various types of businesses to bolster their operations and market position. Here are some common categories:

+ CONTRACT RESEARCH ORGANIZATIONS (CROS)

+ CONTRACT DEVELOPMENT AND MANUFACTURING ORGANIZATIONS (CDMOS): Companies that offer comprehensive services from drug development through manufacturing. These acquisitions help acquirers enhance their production capabilities and streamline supply chains. + MEDICAL TECHNOLOGY COMPANIES Businesses that develop medical devices, diagnostics and health technologies. These acquisitions help acquirers enhance their product portfolios and create integrated healthcare solutions.

Businesses that provide outsourced research services for the pharmaceutical, biotech-nology and medical device industries. Acquiring CROs allows acquirers to expand their research capabilities and service offerings. + BIOTECH FIRMS Innovative companies focused on developing new therapies and technologies. Acquiring biotech firms allows acquirers to gain access to cutting-edge research, intellectual property and new market opportunities. + SPECIALITY PHARMACEUTICAL COMPANIES Firms that develop, and market, niche or specialised pharmaceutical products. Acquisitions in this category enable the buyer to diversify their product lines and enter new therapeutic areas. Strategic acquirers pursue these types of businesses to foster innovation, improve operational efficiency and maintain a competitive edge in the dynamic life sciences industry. Companies that provide expertise in regulatory affairs and compliance. These acquisitions help acquirers navigate complex regulatory landscapes and ensure adherence to industry standards. + REGULATORY AND COMPLIANCE CONSULTING FIRMS

+ DIGITAL HEALTH COMPANIES

Businesses that focus on digital health solutions, such as health IT, wearables and tele-medicine platforms. Acquiring these companies can enhance acquirers’ technological capabilities and improve patient outcomes.

These strategic interests drive trade acquirers and consolidators to actively participate in mergers and

acquisitions within the UK pharma consultancy and life sciences sectors, aiming for growth, innovation and improved operational efficiency.

SECTOR DEAL ACTIVITY

Callisto, a leading UK pharmaceutical consultancy, was been sold to ProductLife Group in a deal advised upon by KBS Corporate Finance. Founded in 2003, Callisto specialises in regulatory affairs, pharmacovigilance and GMDP (good manufacturing and distribution practice) services in multiple regulated sectors including human, veterinary and herbal medicines, food supplements, medical devices, biocides and borderline products. CALLISTO ACQUIRED BY PRODUCTLIFE KBS DEAL

Biobridges, a provider of clinical development services to emerging and established pharmaceutical, biotechnology and medical device companies, was acquired by PharmAlliance Holdings, a pharma services platform company of Waud Capital Partners. BIOBRIDGES ACQUIRED BY PHARMALLIANCE HOLDINGS

Riparian, a pharma consulting and SaaS company that helps manufacturers navigate pricing regulations, reporting, strategies and program operations, was acquired by Two Labs, an industry-leading pharma services company which is part of Envision Pharma Group. RIPARIAN ACQUIRED BY TWO LABS LLC

A market leader in the environmental testing sector and part of the LabAnalysis Group, LAES had 30% of its share capital acquired by Eni Rewind, to form a strategic alliance through which the companies intended to strengthen the integrated solutions offering for the sustainable management of environmental resources, promoting innovation and the protection of the environment and health. 30% OF LAB ANALYSIS ENVIRONMENTAL SCIENCE (LAES) ACQUIRED BY ENI REWIND MTL Projects and Mark Thompson Lifesciences were sold to Normec Group, a Nether lands-based leader in testing, inspection, certification and compliance, in a deal over seen by KBS Corporate. The company’s founder said: “KBS did a lot of research into our industry sector to identify potential buyers we had not even heard of and supported the negotiations and the conclusion of the deal 100%. Good to deal with and responsive throughout. Would highly recommend.” MTL PROJECTS ACQUIRED BY NORMEC GROUP KBS DEAL Analytical solutions company AMPCS was sold to Calibre Scientific, a diversified global provider of life science tools and diagnostics, in a deal advised upon by KBS Corporate. AMPCS supplies cost-effective, reliable and responsive solutions for organisations which depend on analytical instruments to produce real-time data from production processes and quality-control laboratories. AMPCS ACQUIRED BY CALIBRE SCIENTIFIC KBS DEAL

The acquisition of Fortis, a London-based specialist in medical affairs services, added rich industry-side expertise to complement the deep scientific heritage of Bioscript, a unified full-service pharmaceutical communications company. FORTIS PHARMA CONSULTING ACQUIRED BY BIOSCRIPT GROUP

Zeta Analytics, an established and trusted provider of independent testing for licensed human, veterinary and medical products, working with prestigious, multinational clients in the pharmaceutical sector, was sold to Phenna Group, which was making a second ac-quisition through KBS following IASME Consortium. ZETA ANALYTICS ACQUIRED BY PHENNA GROUP KBS DEAL Kalon specialises in the development and production of medical diagnostic kits and commercial enzyme immunoassays EIA kits for the healthcare industry. The company was bought by Calibre Scientific, a diversified global provider of reagents, tools and other products to the healthcare, laboratory and biopharmaceutical industries. KALON BIOLOGICAL ACQUIRED BY CALIBRE SCIENTIFIC KBS DEAL GM is a leading manufacturer and supplier of a diverse range of ENT (ORL) electronic medical instruments including nasal measurement instrumentation, screening audiome-ters and accessories and respiratory flowheads, in addition to calibration and support facilities. The company was acquired by HCE, recognised as one of the UK’s leading distrib-utors of medical/orthopaedic supplies and equipment pharmaceuticals. GM INSTRUMENTS ACQUIRED BY HCE MEDICAL GROUP KBS DEAL

CELLO HEALTH ACQUIRED BY PHARMA VALUE DEMONSTRATION BIDCO

Cello Health, a global healthcare-focused advisory firm which services 24 of the top 25 pharmaceutical clients, was acquired by Arsenal Capital Partners through Pharma Value Demonstration Bidco in a transaction that valued the company at around £179million.

PRIVATE EQUITY DEALS

JUPITER LIFE SCIENCES CONSULTING ACQUIRED BY THE RIVERSIDE COMPANY

Jupiter, a leading provider of commercial and market access strategies for global pharma, biotech and medical device companies, with its primary focus in rare disease, hematology/ oncology, metabolic and neurology therapeutic areas, was acquired by Riverside, a global private investor focused on the smaller end of the middle market. THCC is a clinically-oriented healthcare consulting firm providing services in strategy, compliance, management and clinical operations for health plans in areas including utili-zation management, care management and value-based care. It received investment from Centre Partners, a middle market private equity firm, and HEP, a healthcare-focused investment firm whose investors include some of the largest health systems and health insurance plans in the US. TONEY HEALTHCARE CONSULTING (THCC) RECEIVED INVESTMENT FROM CENTRE PARTNERS AND HEALTH ENTERPRISE PARTNERS (HEP) Blue Matter, a provider of consultancy services to the global pharmaceutical sector, principally in the areas of product and portfolio strategy, organisational design and product launch planning and readiness, received investment from Baird Capital, which makes venture capital, growth equity and private equity investments in strategically targeted sectors around the world. BLUE MATTER RECEIVED INVESTMENT FROM BAIRD CAPITAL Avalere, headquartered in the UK and with 14 offices on three continents, helps to commercialise more than 300 drug compounds. It received investment from Bridgepoint, one of the world’s leading quoted private asset growth investors with over €67bn of assets under management. AVALERE HEALTH RECEIVED INVESTMENT FROM BRIDGEPOINT Herspiegel, a full-service life science consulting firm that specialises in commercial strategy and execution, received a growth investment from DFW. The investment will accelerate Herspiegel’s growth trajectory, enabling it to expand geographically and in the scope and types of services it offers its clients as it continues to build on its industry-leading capabilities and reach. HERSPIEGEL RECEIVED INVESTMENT FROM DFW CAPITAL PARTNERS AxTalis, a consulting services provider to the pharmaceutical and biotech sectors, received investment from UK lower mid-market private equity firm Kester on behalf of its portfolio company MAP Patient Access. Kester said the AxTalis add-on would “complement MAP’s existing presence in the UK and Ireland” in building a pan-European business. AXTALIS RECEIVED INVESTMENT FROM KESTER CAPITAL

KEY ACQUIRERS Key players driving M&A activity in the sector include:

PHARMACEUTICAL CONSULTANCIES

MEDTECH AND DIGITAL HEALTH PROVIDERS

PRIVATE EQUITY-BACKED FIRMS Examples include those supported by

These acquirers prioritise firms with advanced digital capabilities, recurring revenue models and access to high-growth therapeutic areas or geographic markets.

MARKET INSIGHT

M&A ACTIVITY IN THE PHARMA CONSULTANCY SECTOR

M&A activity has grown and is forecast to continue to do so. The pharma consultancy space has displayed strong resilience - despite regulation, increased interest rates and growing competition. Due to the sector’s multi-faceted needs, private equity, akin to trade investors, can leverage consulting companies’ skills, knowledge and expertise to accelerate drug development. For example, Kester Capital made its fifth acquisition in the space, acquiring Map Patient Access. MAP is a leading provider of market access-consulting services to the pharma-ceutical and biotech sectors. Sciris, meanwhile, acquired UK-based Source Health Eco-nomics to obtain a wider market reach in the space. Key players who demonstrated strong M&A activity in the past couple of years were pre-dominantly aggressive mid-sized firms. However, this trend has recently shifted as ‘big pharma’ has started to heavily invest and focus in the pharma services space.

Revenue PHARMACEUTICAL PRODUCT & PREPARATIONS MANUFACTURING IN THE UK Total value (£) and annual change from 2011 - 2009. Includes 5 - year outlook.

90%

60

Forecasted

60%

48

2024 Annual Revenue (£bn) 40 2024 Change 4.2%

30%

36

0%

24

-30%

12

-60%

0

2014

2028

2012

2016

2018

2020

2022

2024

2026

SOURCE: IBISWorld

WHICH FACTORS DRIVE GROWTH IN THE UK PHARMA CONSULTANCY AND LIFE SCIENCES INDUSTRY?

Several key factors are expected to drive growth in the UK pharmaceutical consultancy and life sciences industry. These include:

+ RESEARCH AND DEVELOPMENT INVESTMENTS With substantial R&D budgets, the life sciences sector continues to thrive. Companies in the UK invested £9billion in pharmaceutical R&D in 2022, accounting for 18% of all business R&D. + GOVERNMENT SUPPORT AND FUNDING The UK government has committed significant funding, such as the £1billion investment in the life sciences sector and an additional £1.6billion to improve NHS services. + REGULATORY ENVIRONMENT Post-Brexit regulatory changes are promoting a more dynamic landscape for pharmaceutical companies. Companies must now obtain approval from the UK’s Medicines and Healthcare products Regulatory Agency (MHRA), enhancing compliance and potentially fostering more significant innovation. + EMERGENCE OF MEDTECH A £200million investment by the UK government in the MedTech sector, particularly focusing on data digitisation, is set to boost innovation and commercialisation efforts. + GLOBAL DEMAND Increasing purchasing power in developing economies, coupled with ageing populations in developed ones, continues to drive the demand for pharmaceuticals and life sciences products globally.

These initiatives and investments are driving considerable progress and growth, positioning the UK as a leader in pharmaceutical and life sciences innovation.

Companies in the UK invested £9billion in pharmaceutical R&D in 2022, accounting for 18% of all business R&D.