Pharma Business Services Market Analysis – July 2014

As the pharmaceutical market undergoes changes, pharma business services companies continue to expand the breadth and depth of their service offerings.

Revenue multiples in the public markets are currently tracking at a median of 0.7x, while EBITDA multiples have a median of 10.7x. Since the end of 2012, EBITDA multiples have remained flat and revenue multiples have increased by 21%.

Transaction multiples are tracking in a similar range, with median revenue multiples of 1.6x and median EBITDA multiples of 8.1x over the past two years.

The pharma business services index largely tracks the broader S&P index. Unlike many other healthcare companies that are more immune to economic downturns, early stage biotech and pharma companies that rely heavily on R&D funding were hit especially hard during the financial crisis in 2009. However, recent increase in demand for outsourced pharma services has renewed industry growth. As such, since late 2012, the pharma businesses service index has consistently performed above the S&P 500. In the last 12 months, the pharma business services index reached a 10-year high.

Medical Reprocessing Industry Perspective – July 2014

Healthcare providers are increasingly turning toward reprocessing of medical devices and equipment, in an effort to cut costs and increase sustainability.

Sterilization is the process wherein used medical equipment and devices are sterilized for future use in an effort to destroy the viability of any microbial life. Sterilization equipment represents some of the most critical equipment in a medical facility, given that the efficacy and success of patient outcomes depend on the ability to prevent cross-infections. There are a variety of methods for sterilization, which involve the use of heat, pressure, chemicals, or radiation.

The repair and refurbishment market serves a wide range of medical devices and equipment, from singleuse devices such as endoscopes and surgical tools to larger equipment such as imaging machines. The imaging, monitoring, and diagnostic devices segment is the fastest growing and represents 17% of the global market. Repair and refurbishment services range from basic cosmetic repairs to a full restoration of equipment back to its original state.

CRO Industry Perspective – July 2014

Demand to spur full-service model, strategic partnerships, and growth in preclinical services

Contract Research Organizations (CROs) provide outsourced research services to the biotechnology, pharmaceutical and medical device industries, allowing them to manage R&D costs and focus on their core competencies. These services include drug and device research and development, including drug discovery, preclinical and clinical trials, post-marketing surveillance, and related data management and consulting services.

Preclinical services, which include discovery services, represent 15% of the CRO market. These consist of drug safety testing and toxicity testing in the form of in-vivo and in-vitro experimentation. In-vitro experimentation, conducted using laboratory tools, is used to test the efficacy of a drug on microorganisms, such as extracted cell tissue or DNA molecules. In-vivo experimentation in preclinical trials and drug discovery involves testing on animal models, rather than isolated organisms.

Medical Reprocessing Market Analysis – July 2014

Medical reprocessing market sees renewed growth as healthcare providers face pressures to manage costs and increase sustainability.

The global medical sterilization, repair, and refurbishment industry is expected to reach roughly $13 billion by 2017.¹

Since early 2014, the medical reprocessing index has seen renewed growth and has performed above the S&P 500.

Revenue multiples in the public markets are currently tracking at a median of 2.2x, while EBITDA multiples have a median of 8.4x. Since 2013, these have seen moderated growth rates of 10% and 14%, respectively. In 2013, revenue multiples increased from 1.6x in 2012 to reach a five-year high of 2.0x, while EBIDTA multiples have remained largely flat compared to 2012.