New Results Healthcare Report Examines CRO Market M&A Drivers and Trends

“CROs and other outsourced pharmaceutical support services — M&A drivers and trends” is the title of a new report by healthcare sector corporate finance and strategy specialist, Results Healthcare.

The report examines the rationale for the M&A activity that has been rife across the contract research organisation (CRO) sector and provides Results Healthcare’s view on where future M&A activity is likely to be focused. As well as providing a background on the current and foreseeable market climate, the report looks beyond CRO players to other outsourced support services providers and examines the M&A trends for specialists providing site management organisation (SMO) services, as well as market access, pharmacovigilance and e-clinical solutions. It provides an overview of a selection of key deals completed in the past few years and further highlights the future prospects of this dynamic, developing and growing market.

The CRO sector is seeing a recovery, driven by improved optimism across the biopharma industry, the sector’s largest customer group, where many key CRO customers are now at the tail end of multi-year patent cliffs and are stepping up investments into their pipelines, particularly products in late-stage development. After 2 years of declining budgets, rising R&D expenditure and increased outsourcing, due primarily to biopharma’s need to shift fixed to variable costs and access capabilities not found internally, are expected to continue fuelling steady growth of the global CRO market. As such, the market is poised to grow from $23–25 billion today to more than $30 billion by 2018, according to recent estimates from Bank of America Merrill Lynch, reflecting a 5–6% CAGR, led by faster growth of late-stage versus early development services.

The report observes that although M&A continues to be driven primarily by strategic buyers looking to increase scale or add specialist capabilities they lack in-house to improve their overall service offering, it is often the private equity deals that make the headlines, frequently because of their sheer scale and the impact they have on the industry. It cites two important secondary private equity transactions completed this year, KKR’s purchase of PRA International and Research Pharmaceutical Services (RPS), as evidence of consolidation and a move to increase scale, and potentially game changing deals in the CRO sector.

“We are seeing strong appetites for acquisition in particular segments of the CRO sector,” commented Hemavli Bali, Executive Director, Results Healthcare. “These range from medical communications and patient recruitment, to health economics and outcomes research, to patient engagement solutions, health informatics and pharmacovigilance. Healthcare IT will also remain a major focus, as CROs look to increase efficiencies across the board, including technologies that allow for real-time access to data, cloud platforms, and the use of mobile devices to simplify the collection of data.”

The full report is available to download free of charge at www.resultshealthcare.com/news-insights/white-papers/cro-white-paper