The latest insights on M&A activity in life sciences commercial vendors

As part of our LINX bio-pharma vendor review, Zensights is pleased to share an update on merger activity to help our clients understand the market activity that may impact their supplier relationships.

Key M&A highlights in Q1 2024:

  • Merger activity continues into the new year. In the first quarter of 2024, merger activity continued, with six acquisitions identified within the markets we monitor for our clients. This volume is roughly consistent with the average volume over the past year and slightly below the average volume over the past two years. It is down from the same period last year (10 identified in Q1 2023), and we will be watching the market with interest to see how M&A activity progresses into the year.
  • AI is a driver of deal activity. Several recently announced acquisitions cite leveraging AI capabilities as the deal’s driver, acknowledging both suppliers’ interest in having AI capabilities and clients’ interest in exploring and capturing value from AI.
  • FTC scrutiny into and skepticism about M&A now impacting pharma supplier space. The expanded FTC involvement in M&A activity in the past few years by the Biden administration has changed overall M&A dynamics across all industries, including the broader life sciences space. This quarter is the first time we’ve seen it impact the life sciences supplier space, but it’s reasonable that this will be a factor in larger and medium-sized deals in the future.
  • Serial acquirers are absorbing prior acquisitions and adapting to their new capabilities. The launch of Inizio Evoke into the market, incorporating capabilities from more than two dozen divisions of the holding company, including past acquisitions, shows that acquirers are absorbing and adapting. These firms have been adapting their marketing positioning and offering mix to engage with their clients more effectively. This change is consistent with what our clients report from other serial acquirers.
  • PE firms and other serial acquirers are planning their exits. Consistent with the private equity business model, which includes buying, reconfiguring, and selling assets/companies, we are beginning to see activity by the large serial acquirers that have been active in the market over the past few years. We are monitoring the ongoing execution of their plans to exit from the various firms and markets in which they are active.

2024 Q1 Activity

In the first quarter of 2024, M&A activity continued into the new year with six deals identified in the firms we monitor for our clients, including one deal that was abandoned due to FTC and judicial scrutiny. We also note new market positioning by one firm that has been active with M&A in prior quarters. The following deals were identified:

1. IQVIA abandons Deep Intent merger (January 2024)

IQVIA has abandoned its acquisition of Propel, the owner of DeepIntent. In 2022, when IQVIA announced its intent to acquire Propel, the Federal Trade Commission (FTC) intervened and blocked the transaction. The FTC argued it would give IQVIA a dominant position in healthcare product advertising, specifically for prescription drugs targeted at doctors and healthcare professionals. IQVIA disagreed, but after a New York judge upheld the block early in 2024 the two firms halted their deal.

This expanded FTC involvement in M&A activity in the past few years has changed overall M&A dynamics across all industries, including the broader life sciences space. This deal is the first time we’ve seen it impact the life sciences supplier space, but it’s reasonable that this will be a factor in larger and medium-sized deals in the future.

2. Inizio Evoke launched from M&A activity done in prior periods (January 2024)

Inizio Evoke has been launched to consolidate the differing branding and capabilities of a wide range of Inizio companies and divisions. Inizio has made this change to simplify its large portfolio for the market and customers. Over two dozen individual organizations have been consolidated into the overall brand simplification across various capabilities and country markets.

Per the company, Inizio is making this change “to support their desire to be the premier partner for the world’s most innovative and ambitious healthcare organizations with an even stronger focus on delivering client-centric solutions that drive transformative growth.”

3. PharmAlliance announces acquisition of Monitorforhire (January 2024)

Pharmaceutical and life sciences service provider PharmAlliance has announced it will acquire Monitorforhire (MFH), a web-enabled resource management company connecting professionals with clinical research opportunities. The company reports the acquired organization will operate within BioBridges, their talent arm, and will introduce a new capability, providing expertise and services to clients and its global network of more than 4k clinical research professionals.

4. Real Chemistry acquires Avant Healthcare (February 2024)

Real Chemistry, a provider of AI-driven insights and marketing/medical communication, is expanding its medical education, medical affairs, and HCP communication capabilities by acquiring Avant Healthcare. Avant is a medical communications firm with deep expertise in data driven strategies, high science and digital/creative with capabilities that span the drug communication lifecycle. Drivers for the deal were explained as helping clients adapt to HCP demographic changes, supporting patients with increasingly complex diseases, and supporting upcoming product breakthroughs into the next few years.

5. Spectrum Science buys Continuum Clinical (February 2024)

Spectrum Science, an integrated healthcare and scientific marketing, communication, media, and strategic services firm focused on the broader life sciences industries, is planning to acquire Continuum Clinical. Continuum is a global clinical trial recruitment and engagement solutions provider currently owned by Blue Chip Worldwide, a different marketing agency. Continuum will become part of Spectrum’s clinical trial recruitment capability, adding depth and breadth and a large and diverse client roster.

6. CoreRx Inc. enters into an agreement to purchase Societal CDMO (February 2024)

CoreRx, Inc., a CDMO that provides drug formulation, development, and manufacturing to global pharmaceutical and biotech partners, is acquiring Societal CDMO, another CDMO that helps clients solve complex formulation and manufacturing challenges, primarily in small-molecule therapeutics. The company reports that “together, the combined firm will be positioned to offer both existing and new customers increased strength in formulation development, early-stage production, clinical trial services, commercial-scale manufacturing, and a range of packaging services.”

7. International Flavors & Fragrances (IFF) is selling its pharma solutions business to Roquette (March 2024)

International Flavors & Fragrances (IFF) has agreed to sell its pharma solutions business to French plant-based ingredient maker Roquette. The IFF pharma solutions business runs ten research and development and manufacturing sites around the world, employs more than 1,000 staffers, and generates revenues of roughly $1 billion per year. This deal is part of a strategic initiative by IFF to focus its business on the food and consumer industries, while Roquette has been looking to expand its pharmaceutical capabilities.