Biopharma Services Industry Update Q4 2023

Read more about M&A activity and trends in this sector

U.S. Biopharma Services Industry Update Q4 2023

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Public Markets Update and Outlook

The biopharma services sector group of stocks modestly trailed the performance of the S&P 500 in 2023 (+20.6% versus +24.7%). Valuations for the group finished the year at 19.2x EV/LTM EBITDA, up from the 2023 yearly average of 16.2x and above the 3-year average of 18.0x.

Investors appear to be cautiously optimistic as it relates to the sector heading into 2024.  The momentum around biologic drugs, precision medicine, and other advanced therapies are meaningful drivers. Additionally, Big Data, AI and Machine Learning are being increasingly integrated into the drug development world and offer the potential for significant efficiencies.

From a funding standpoint, the cash runway for emerging, listed biopharma companies is moderately below the 3-year average (22.0 months versus 28.1 months) reflecting a more difficult fundraising environment for public companies. Likewise, the private biopharma funding environment has also been challenging as there was nearly a 29% decrease in venture capital funding on a year-over-year basis. We note that this decrease tracked the overall venture capital fund raising environment (all sectors). Further, on the good news front, the biopharma IPO market seems to be showing signs of life after a period of relative inactivity.

M&A Performance Snapshot

Deal Volume

Deal Value ($Bn)

Deal Multiples*(1)

*2023 has multiples from 3 deals


M&A Market Update

2023 saw a drop in reported deal volume compared to 2022 and 2021. However, deal volume in 2023 was still above pre-pandemic levels. Meanwhile, the reported deal value in 2023 surged by over 50% compared with 2022. Four mega deals in excess of $1Bn helped drive this increase: Syneos Health ($7.4Bn), Worldwide Clinical Trials ($2.0Bn), Baxter BioPharma Solutions ($4.3Bn), and F.I.S. ($1.4Bn).

Notable Q4-23 deals included: Ajinomoto acquiring Forge Biologics, a gene-therapy CDMO, Accenture acquiring healthcare Concentric Partners, a healthcare marketing agency, and Certara acquiring Applied BioMath, a provider of model-informed drug discovery and development services.

Financial investors continued to be meaningful players in the sector in 2023. All four of the previously mentioned mega deals involved PE buyers, inclusive of Elliott Management, Patient Square, Veritas, Warburg Pincus, Advent International, and Bain. In 2024, we expect that PE exit activity will increase driven by improving valuations as well as extended hold periods. At present, the average hold period for North American private equity funds reached a 20-year high of 7.1 years in Nov-2023(3).

KPMG US 2024 Healthcare & Life Sciences Investment Outlook – Key Takeaways


Demand for CGT clinical trials and manufacturing: There are twice as many biologics in clinical trials now as there were in 2019. Much of that work will continue to be outsourced to biopharma services companies.

An increasing reliance on AI: The potential for AI-powered applications to streamline and speed up operations across the sector is likely to lead to increased M&A as companies position themselves to provide innovative services to clients.

A boost from PE: As PE volume is expected to rebound in 2024, biopharma services M&A activity should increase given PE’s strong participation in the sector.


Valuation Uncertainty: Amid turbulence in the sector, there remains a valuation disconnect between buyers and sellers.

Dealmaking impediments: Although the cost of capital appears to be stabilizing, it remains much higher than in recent years, challenging the calculus for making acquisitions.

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.


Notes: Data as of Dec 31, 2023

1. EBITDA multiples exclude clinical trial software and other health IT-focused transactions; 2. Includes add-on deals; 3. S&P Capital IQ Publication – 22 Nov 2023

Sources: Press releases, Capital IQ, MergerMarket, and PitchBook; 2024 Healthcare & Life Sciences Investment Outlook, KPMG LLP US

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U.S. Biopharma Services Industry Update Q4 2023

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