KBS - Pharmaceutical Consultancy and Life Sciences - Market Insight

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.