Biopharma Services Industry Update - H1 2023

M&A Market Update

In 2023 YTD, there were 65 transactions representing $12.5 billion in deal value. Notably, two large transactions were responsible for nearly $11.7 billion of the $12.5 billion in deal value. These transactions were Baxter’s sale of its Biopharmaceutical Solutions business to Advent and Warburg Pincus for $4.3 billion and the $7.4 billion Syneos take-private transaction by Elliott, Patient Square and Veritas. Likewise, the average deal multiple of 11.7x for 2023 YTD was driven by these two transactions. However, while we feel that transaction multiples have come off the highs seen in 2021 and 2022, we also believe that typical M&A multiples continue to be in the mid-to-high teens.

Turning back to transaction volume, the current run rate for 2023 is ~130 transactions, which is roughly in line with the pre-pandemic level seen in 2019. 

Sponsor-Backed M&A Activity

In 2023 YTD, the biopharma services sector has continued to witness strong participation from the private equity community as nearly 68% of the M&A deals were PE-backed. This level is consistent with the level seen in 2022 (~70%) and represents a marked increase from the 2019 (pre-pandemic) level in which (only) 44% of transactions were PE-backed.

As discussed above, while Baxter’s divestiture of its Biopharmaceutical Solutions business ($4.3 billion) and the Syneos take private transaction ($11.7 billion) represent larger platform transactions, it is important to note, that upwards of 75% of the PE-backed transactions were add-on acquisitions. For example, during the last six months, Kymanox (backed by WestView Capital) acquired two companies to strengthen its commercialization capabilities and Novotech (backed by TPG Capital) also did two acquisitions to expand its CRO operations and to strengthen its regulatory expertise.

Given the robust fundamentals within the biopharma services sector, we expect to see continued strong participation from private equity firms as the consolidation trend in the sector continues and as PE-backed platform companies continue to expand service offerings up and down the biopharma development and commercialization continuum. 

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.