M&A activity drives record year for pharma outsourcing deals
pharmafile | December 11, 2015 | News story | Sales and Marketing | Covance, M&A, MA, labcorp, outsourcing
A drastic increase pharma industry in M&A activity has propelled the value of pharmaceutical outsourcing deals from $9.9 billion in 2014 to nearly $17.6 billion through October 2015, new figures show.
The growth puts the sector on track for a record-breaking year, according to an analyst with research and consulting firm GlobalData.
The growth trend seen over the last few years has accelerated in 2015, leading to M&A deals specifically within the pharmaceutical outsourcing services sector more than doubling over the past year, from $5.5 billion in 2014, to $12 billion by October 2015.
Dion explains: “This year has seen a number of high-valued transactions, including LabCorp’s $6.1 billion purchase of Covance, and WuXi being sold for $3.3 billion to a Chinese private equity group.
“Contract manufacturers have also been busy in 2015. Siegfried Holding, an API maker based in Switzerland, bought BASF’s pharmaceutical supply business, and Lannett acquired Kremers Urban Pharmaceuticals, a specialty generic drug maker and subsidiary of UCB, for $1.2 billion.”
LabCorp’s cash and stock purchase of clinical trial contractor Covance created a combined business with pro forma revenue of nearly $8.4 billion, leapfrogging its closest rival, Quest Diagnostics, and establishing a new leader in the medical testing space.
Dion continues: “LabCorp’s intentions seem pretty clear – it wants a larger piece of the Contract Research Organisation (CRO) market. The CRO sector has enjoyed impressive growth over the past few years, as plummeting sales from the loss of exclusivity branded drugs, the high cost of pharmaceutical research and development, and the globalisation of clinical trials, have led to a surge in demand for outsourced clinical trial work.
“GlobalData expects that Covance will act as a separate entity under the LabCorp moniker, in which LabCorp can leverage Covance’s leadership in clinical trials monitoring, patient and sponsor recruitment, and study site selection through its proprietary Xcellerate technology platform.”
Joel Levy
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