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Pharma Tech Outlook | Monday, January 17, 2022
Life sciences is a business sector that is believed to continue to attract strong investor interest, which will drive CDMO and CRO deals.
Fremont, CA: In terms of the significance of merger and acquisition (M&A) deals, the pharmaceutical contract development and manufacturing organization (CDMO) and contract research organization (CRO) sectors have exploded in the previous five years. Increased use of pharmaceuticals, supply chain retrenching to regional and national manufacturing hubs, and novel revolutionary medications are among the factors driving considerable investor interest in these business sectors.
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CDMO business sector outlook
With the increased usage of pharmaceuticals in growing and aging populations, the CDMO sector benefits from solid growth fundamentals. In the previous 24 months, Covid-19 has been the most significant factor in the life sciences business. The pharmaceutical industry has been hailed as a significant source of new remedies for this pandemic, having developed and deployed a number of very potent novel vaccinations in a short period of time. This has improved the public's opinion of the pharmaceutical business, in particular. Life sciences have drawn investment and are seen as a safe-haven investment in these difficult times by investors.
CRO business sector outlook
The CRO industry has grown significantly in the last five years, owing to the increased sophistication of CRO service offerings—in the past, they would only provide basic chemistry and screening services; now, they are increasingly collaborating and contributing to the IP generated by these drug discovery programs. Companies of scale like Evotec, Curia, WuXI AppTec, and Charles River Laboratories provide complete research and pre-clinical development services to pharma, biotech, not-for-profit organizations (such as the Gates Foundation), and academic institutions. The surge in interest in pharmaceutical innovation has boosted their spirits.
Behind these larger CROs is a slew of smaller but rapidly developing businesses that PE and investors are eager to invest in. The Symeres acquisition and the Sygnature Discovery agreement, both of which are said to value these firms in the high teens/low twenties EBITDA multiples, reflect substantial investor interest in this quickly emerging economic sector.
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