Pharmaceutical Outsourcing - Coverage Report Q1 2019

Published on: 02/25/2019

Merger and acquisition activity in the Pharmaceutical Outsourcing industry remained strong in 2018, with 63 announced or closed transactions compared to 57 in 2017. Factors driving activity include robust drug pipelines, increasing complexity of trials and drug manufacturing, and more stringent regulatory scrutiny.

Despite an active M&A market over the past several years, the sector remains highly fragmented. It’s no secret that Big Pharma would prefer to partner with fewer outsourced providers. “For us we have 300 to 400 contract manufacturing partners and would rather work with 10,” Tim Kent, Pfizer Global Supply VP of Business Development, recently stated in a news article. Not surprisingly, strategic buyers drove 65.1% of deal activity in 2018 as they utilized M&A to bolster service offerings, expand their geographic footholds, and offer more turnkey solutions. On the other end of the spectrum is emerging pharma, which is accounting for a greater percentage of new drugs under development, and prefers the responsiveness of small to medium-sized outsourced providers.

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