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.