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Clinical Research Market Update
Consolidation has been a recurring theme in the clinical research industry of late, with various large contract research organisations (CROs) expanding the breadth and reach of their offerings through acquisitive growth strategies. This is against the backdrop of significant growth in the market for outsourced research, particularly in the clinical trials segment which represents the final hurdle of the highly regulated research process.
More than just a fad, this trend is closer to a paradigm shift in the way pharmaceutical companies develop and commercialise drugs – an industry that has struggled to contain costs and timelines associated with trials. With rising costs of development (up nearly 14x since the 1970s) and commercialisation of new therapeutics, pharmaceutical companies are struggling to maintain global research and development teams and facilities. Outsource penetration in the clinical research market is currently 45% of trials and is forecast to rise to 50% by 2020, creating a $30bn market for CROs.
Cross border deals by strategic buyers and private equity players have captured headlines and fuelled rising valuations, with the recent acquisition of UK-based Chiltern by NYSE listed LabCorp for £1.2bn at a valuation of 24x EBITDA being a prime example. CROs are increasingly in search of global M&A opportunities to gain regulatory expertise and relationships with foreign regulatory authorities. This isn’t about to slow down either as pharmaceutical companies push their outsource partners to facilitate drug approvals on a global scale.
Much has been made of the UK decision to leave the EU and the resulting speculation regarding the UK clinical trials industry. Importantly, the UK government has reiterated its commitment to implementing the new EU clinical trial rules due to come into force in 2020. This would maintain a harmonised clinical trial regulatory environment in Britain and essentially uphold the status quo. The new rulings would be a major step forward for the industry and would enable a streamlined application process for all EU clinical trials, simplifying the highly complex reporting procedures. As with much to do with Brexit, little is set in stone, however the UK government’s “strongest possible reassurance, whatever happens in negotiations” has quelled speculation for the time being. One thing is for certain – UK inbound M&A in the sector is not slowing down.
Recent M&A activity
Healthcare Research and Consulting
Syneos Health has acquired Kinapse Limited, the UK-based provider of consulting and outsourcing services to pharmaceutical and life sciences industries for an undisclosed consideration
LabCorp has acquired Chiltern International Limited, the UK-based contract research company engaged in providing clinical development services for £1.2bn
Spectris Plc has acquired Concept Life Science Limited, the UK-based company engaged in international scientific laboratory and consultancy research for £163m
H2 Equity Partners has acquired Aquilant limited, the UK-based company engaged in distribution of specialist medical, pharmaceutical and scientific products and services, for £17m
Ryboquin Company has acquired Nanogenic Solutions Limited, the UK-based developer gene therapy solutions for £4m
Denali Therapeutics has acquired F-star Gamma Limited, the UK-based company engaged in drug development, for £14m
GlaxoSmithKline Plc has acquired the remaining 36.5% stake in GlaxoSmithKline Consumer Healthcare from Novartis for an undisclosed consideration
Gooch & Housego Plc has acquired Integrated Technologies Limited, the UK-based manufacturer of electronic medical devices for £22m
Katena Products has acquired Blink Medical Limited, the UK-based manufacturer of single-use medical instruments for the ophthalmic surgical practices for an undisclosed consideration
Koninklijke Philips N.V. has acquired Remote Diagnostic Technologies Limited, the UK-based medical device company specialising in remote monitoring and resuscitation solutions for an undisclosed consideration
Permira Advisers has acquired a majority stake in Corin Group Plc, the UK-based company engaged in development, production and distribution of orthopaedic devices for an undisclosed consideration
A group of investors have acquired an undisclosed stake in CMR Surgical Limited, the UK-based developer of a next-generation surgical robot for £75m
Core Equity Holdings Limited, a Belgium-based private equity firm, has acquired Portman Healthcare Limited, the UK-based dental care provider, for £300m
William Demant Invest has acquired an 85% stake in Vision RT Limited, the UK-based supplier of surface guided radiation therapy, for an undisclosed consideration
Cygnet Health Care Limited has acquired Danshell Care Limited, the UK-based operator of nursing care facilities for an undisclosed consideration
NMC Health Plc has acquired Aspen Healthcare Limited, the UK-based company engaged in hospital management for £252m
SAGE Publications, the UK-based company engaged in publishing journals, books and electronic media, has acquired Talis Education Limited for an undisclosed consideration
The management of TeacherActive Limited, the UK-based teachers, education support staff and nursery recruitment firm, has acquired the company, for an undisclosed consideration
Busy Bees Nurseries Limited has acquired Daisy & Jake Day Nursery Ltd., the UK-based childcare provider for an undisclosed consideration
Morneau Shepell Inc. has acquired LifeWorks Corporation Ltd, the UK-based employee assistance program and wellness provider for an undisclosed consideration
Dimensions Training Solutions Limited has acquired Learndirect Limited, the UK-based online training company for an undisclosed consideration
ICP Nurseries Limited has acquired Zeeba Nurseries Limited, the UK-based operator of nurseries, for an undisclosed consideration
Busy Bees Nurseries Limited has acquired Mace Montessori Schools, the UK-based company that owns and operates nine-day nurseries and a school, for an undisclosed consideration
The management of ICS Learn Limited, the UK-based company providing distance learning services has acquired the company in a management buyout transaction, for an undisclosed consideration
For more up to date information on news and transactions in the space, follow us on twitter @Nexus_CF