Outsourced service providers to the pharmaceutical and medical device industry continue to expand their service offerings and geographic presence—and CROs have become buyers.
Valuations in the space continue to rise, with revenue multiples in the public markets currently tracking at a median of 2.7x, and median EBITDA multiples of 15.4x.
Median revenue multiples are 1.7x and median EBITDA multiples are 13.9x for transactions over the past three years. In September 2015 transaction multiples of EBITDA were 9.3x, so valuations have moved significantly higher.
Brocair’s index of pharma business services companies outperformed the S&P 500, and is up approximately 135% in the past five years, versus nearly 100% for the broader index.
M&A activity in the space has continued apace as industry leaders have been trying to consolidate the market share by merging with competitors, and traditional CROs have been moving into complementary services in the space.