Dental Products Market Analysis – August 2014

Geographic expansion and advanced technology help drive acquisitions in the dental products market.

The dental products market is expected to grow at an annualized rate of around 7%, reaching $27.6 billion by 2015. The market for dental implants and dental biomaterials is expected to grow at 6% and 10.5% respectively from 2010 – 2015.¹

Revenue multiples are currently tracking at a median of 1.9x, while EBITDA multiples have a median of 13.9x. Since 2012, these have seen 73% and 31% increases, respectively.

Since the acquisition of Astra Tech by DENTSPLY in August 2011 and the acquisition of BioHorizons by Henry Schein in December 2013, there has been further consolidation among the top players in the market. In April 2014 Zimmer announced an agreement to acquire Biomet for $13.4 billion. Two months later, Nobel Biocare, the world’s second-biggest maker of dental implants, announced a possible sale of the company.

Pharma Business Services Industry Perspective – August 2014

Changing dynamics in the pharmaceutical industry are driving a growing demand for outsourced services.

Research and Markets valued the global healthcare business process outsourcing (BPO) market at $92 billion in 2013. The market is expected to reach $188 billion by 2018, growing at a CAGR of 10.8%. The industry for outsourced business services includes payer, provider, and pharmaceutical outsourcing segments. Of these, pharmaceutical outsourcing represents the largest segment. Within the pharmaceutical outsourcing segment there are clinical research organizations (CROs), contract manufacturing organizations (CMOs), and companies that provide non-clinical, business support services.

Pharmaceutical business process outsourcing groups provide non-clinical services such as medical communications, marketing, operational and analytical support, and compliance and regulatory services. When it comes to drug development, the process from initial analysis of the opportunity to bringing the drug to market involves several steps. There are opportunities to outsource elements of each one and many pharma services companies are well equipped to take on several of them.

According to KPMG, the most highly outsourced steps within the drug development process are discovery, development, and launch/marketing. Regulatory support is also a key across each one of the above steps, and is increasingly being outsourced as well.

Areas expected to experience the most growth in the near future include marketing, sales analytics, drug development support and compliance and regulatory services. These represent areas that are less functional in nature, and more strategically important.

Pharma Business Services Market Analysis – July 2014

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.

Medical Reprocessing Industry Perspective – July 2014

Healthcare providers are increasingly turning toward reprocessing of medical devices and equipment, in an effort to cut costs and increase sustainability.

Sterilization is the process wherein used medical equipment and devices are sterilized for future use in an effort to destroy the viability of any microbial life. Sterilization equipment represents some of the most critical equipment in a medical facility, given that the efficacy and success of patient outcomes depend on the ability to prevent cross-infections. There are a variety of methods for sterilization, which involve the use of heat, pressure, chemicals, or radiation.

The repair and refurbishment market serves a wide range of medical devices and equipment, from singleuse devices such as endoscopes and surgical tools to larger equipment such as imaging machines. The imaging, monitoring, and diagnostic devices segment is the fastest growing and represents 17% of the global market. Repair and refurbishment services range from basic cosmetic repairs to a full restoration of equipment back to its original state.

CRO Industry Perspective – July 2014

Demand to spur full-service model, strategic partnerships, and growth in preclinical services

Contract Research Organizations (CROs) provide outsourced research services to the biotechnology, pharmaceutical and medical device industries, allowing them to manage R&D costs and focus on their core competencies. These services include drug and device research and development, including drug discovery, preclinical and clinical trials, post-marketing surveillance, and related data management and consulting services.

Preclinical services, which include discovery services, represent 15% of the CRO market. These consist of drug safety testing and toxicity testing in the form of in-vivo and in-vitro experimentation. In-vitro experimentation, conducted using laboratory tools, is used to test the efficacy of a drug on microorganisms, such as extracted cell tissue or DNA molecules. In-vivo experimentation in preclinical trials and drug discovery involves testing on animal models, rather than isolated organisms.

Medical Reprocessing Market Analysis – July 2014

Medical reprocessing market sees renewed growth as healthcare providers face pressures to manage costs and increase sustainability.

The global medical sterilization, repair, and refurbishment industry is expected to reach roughly $13 billion by 2017.¹

Since early 2014, the medical reprocessing index has seen renewed growth and has performed above the S&P 500.

Revenue multiples in the public markets are currently tracking at a median of 2.2x, while EBITDA multiples have a median of 8.4x. Since 2013, these have seen moderated growth rates of 10% and 14%, respectively. In 2013, revenue multiples increased from 1.6x in 2012 to reach a five-year high of 2.0x, while EBIDTA multiples have remained largely flat compared to 2012.

Brocair advised on $144 million acquisition of the medical communications business of KnowledgePoint360 by UDG Healthcare

Brocair Partners LLC, an investment bank serving the healthcare industry, advised on the acquisition of the US and UK-based healthcare communications business of KnowledgePoint360 by Ireland-based UDG Healthcare

NEW YORK, NY – March 20, 2014 – Brocair Partners LLC, an investment banking firm serving the healthcare industry, advised UDG Healthcare plc, a London Stock Exchange-listed leading international provider of services to healthcare manufacturers and pharmacies based in Dublin, Ireland, on its acquisition of the healthcare communications business of KnowledgePoint360. KnowledgePoint360 is based in Macclesfield, United Kingdom, and Lyndhurst, New Jersey, and was a portfolio company of ABRY Partners, based in Boston, Massachusetts.

The deal, agreed at a total cash consideration of $144 million [€105 million], is expected to complete by the end of March 2014.

The acquisition establishes UDG Healthcare as a leader in the global healthcare communications market, complementing UDG Healthcare’s existing global healthcare communications offering, which it provides through its Ashfield Division in the UK and the US.

Gregg Blake, Managing Partner of Brocair, explained, “UDG has been a long-standing client of Brocair, and we have evaluated a range of opportunities for strategic investment over the years. The transaction represents the largest acquisition to date in UDG’s history, and will position UDG’s Ashfield Division as the leading provider of healthcare communications services worldwide, with a very strong market position in Europe and North America.”

Liam Logue, Director of Group Corporate Development at UDG Healthcare, remarked “Gregg and the rest of the Brocair team were exceptionally professional and responsive throughout the transaction process. Their efforts were critical in helping us refine our approach and work through the complexities that always emerge during the negotiation process. We were very pleased with Brocair’s contribution to the transaction.”

UDG Healthcare plc is a leading international provider of services to healthcare manufacturers and pharmacies, with operations in 22 countries including the US, UK, Ireland and Germany. The Group operates across three divisions: Ashfield Commercial and Medical Services, Supply Chain Services and Sharp Packaging Services.

Ashfield Commercial and Medical Services is a global leader in the provision of contract sales outsourcing services to pharmaceutical manufacturers, with operations in major markets including continental Europe, the UK, North America and a presence in South America and Asia. The division provides sales teams, telesales, nurse educators, medical information, healthcare communications and event management services to healthcare companies in 22 countries. It focuses on supporting healthcare professionals and patients at all stages of the product life cycle.

KnowledgePoint360 is a leading global provider of multi-channel healthcare communication services. It employs over 600 staff across 10 global locations. KnowledgePoint360 is principally a healthcare communications business, including medical education, publication support, thought leader engagement and scientific content development, with a complementary meetings management division. These services are normally sold to global pharmaceutical companies across the medicines life cycle but, in particular, at the pre-launch stage, to educate key influencers about the therapeutic category and the relevant products being brought to market.

Brocair Partners LLC, with its headquarters in New York, provides investment banking services to businesses serving the healthcare, wellness, and pharmaceutical industries. Brocair provides mergers & acquisitions, corporate finance, and strategic advisory services to companies worldwide.

Healthcare Staffing Market Analysis – February 2014

Industry leaders continue robust M&A activity

The $14 billion U.S. healthcare staffing and physician outsourcing industry is expected to continue growing due to increased demand for outsourced recruitment services and the need to cut healthcare expenditures. M&A activity in this industry has continued to grow as the economic recovery progresses.

Revenue multiples in the public markets are currently tracking at a median of 0.8x, while EBITDA multiples have a median of 11.5x. Since the end of 2012, these have grown 60% and 13% respectively.

Transaction multiples are tracking in a slightly lower range, with median revenue multiples of 0.6x and median EBITDA multiples of 9.0x over the past two years. Lower multiples in 2011 and 2012 partially attributed to the difference. While the market underperformed the S&P index from late 2011 to mid 2012, recent regulatory pressures for hospitals to cut costs have renewed industry growth, which has been reflected in public market valuations.

Healthcare Insurance Services Industry Perspective – January 2014

New regulations set to transform the U.S. healthcare landscape are providing strong growth opportunities for the firms that service health insurance companies.

In 2013, MarketsandMarkets valued the U.S. insurance services industry at $11.1 billion. The industry is expected to grow at a 30% compound annual growth rate (CAGR) through 2016.

Insurance services companies provide outsourced services to healthcare payers and administrators. Healthcare payers are the institutions that finance the delivery of healthcare and include insurance carriers, employers, and government entities. Healthcare administrators include managed care organizations and third party administrators (TPAs), organizations that are contracted to administer and manage health plans for healthcare payers.

These companies employ highly complex business processes, which historically have been manually intensive and prone to error. For this reason, they look to insurance services companies to manage their costs, mitigate risks, and improve the operational efficiency of back office processes, allowing them to focus on their core competencies.

CRO Market Analysis – December 2013

The CRO market favors a full service model and strategic partnerships

The U.S. CRO industry is currently valued at $15.1 billion and is expected to grow at an annualized rate of 11.0% to $25.5 billion during the five years to 2018.¹ Revenue multiples are currently tracking at a median of 1.6x, while EBITDA multiples have a median of 12.8x. Since 2011, these have seen compound annual growth rates of 28% and 29%, respectively. Transaction multiples are tracking in a similar range, with median revenue multiples of 2.3x and median EBITDA multiples of 10.5x over the past 2 years.

Recent M&A activity in the CRO industry illustrate a trend towards a full service model. Top players have been acquiring small niche CROs to expand service offerings and form strategic partnerships with large pharmaceutical companies.

For example, in April 2013, PAREXEL International, a leading global CRO, acquired Heron Group, a life sciences consultancy firm for $24 million. PAREXEL announced shortly after that its acquisition of Heron Group will further its ability to offer their clients a full spectrum of services that aid in product development. Similarly, Eurofins Scientific, a world leader in bio analytical support, has been actively seeking service expansion. In September 2012, Eurofins acquired Pan Labs’ pharmacology unit to leverage its discovery capabilities and build a significant spectrum of new services that can be offered to clients.