Pharma Business Services Market Analysis – September 2015

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

Valuations in the space continue to rise, with revenue multiples in the public markets currently tracking at a median of 1.2x, and median EBITDA multiples of 12.2x.

Median revenue transaction multiples are higher, at 2.5x while median EBITDA multiples are 9.3x for transactions over the past two years.

Brocair’s index of pharma business services companies has largely tracked the broader S&P index. However, since late 2012, our index has consistently performed above the S&P 500. In the last 12 months, the index reached a 10-year high.

M&A activity in the space has been robust as companies have been trying to strengthen and broaden their capabilities and geographic reach.

Pharmaceutical Distribution Market Analysis – September 2015

Domestic and international expansion spurs acquisitions as the pharmacy market continues to vie for growth

Over the past three years, revenue multiples in the public markets have remained consistent at a median of 0.5x while EBITDA multiples have increased to a median of 10.5x. Since 2012, mean EBITDA multiples have increased by approximately 62%.

Transaction multiples are in a similar range with median revenue multiples of 0.6x and median EBITDA multiples of 11.4x over the past two years.

Our pharmacy index has largely outperformed the S&P 500 index over the past three years. The recent spike in the number of transactions within the industry has fueled the unprecedented growth. In an effort to gain market share, the top players in the industry continue to acquire smaller companies. The competition between these market leaders has led to the inflation of both public and private multiples.