CPHI Conclusion

In October, I attended CPHI Worldwide in Barcelona, Spain along with Banks Bourne, Jeremy Johnson, Todd Bokus, and Jennifer Buchanan from the Bourne team. CPHI Barcelona is a prominent global event that creates connections and inspires partnerships across the global Pharma/Pharma Services community. Below are my key takeaways from the event:?

What’s Going on With Private Equity?

In the current business landscape, both private equity (PE) firms and strategic entities exhibit a renewed level of discipline in their approach to valuation multiples and capital investment. This stringent adherence to financial considerations underscores a more cautious and calculated decision-making process. Notably, PE firms demonstrate a waning enthusiasm for sterile manufacturing, driven by apprehension surrounding potential oversupply. Instead, their focus has shifted towards fostering the growth of existing platforms, supplemented by strategic ancillary acquisitions aimed at broadening service capabilities and expanding market footprint. This strategic pivot reflects a nuanced and forward-thinking approach as these entities navigate the complexities of the current economic environment.

Investing in a Challenging Financial Climate

Against the backdrop of the current demanding financing climate, the prevalence of add-ons to existing platforms and smaller platform investments is expected to persist. In this environment, investors and strategic players appear to display a diminished interest in early-stage opportunities, particularly those focused on pre-clinical and Phase 1 and 2 stage development. This general shift in focus can be attributed to the challenges posed by the funding landscape in the biotech sector, prompting a greater willingness to allocate capital towards later-stage commercial opportunities. Although there has been a compression in valuation multiples within Pharma Services, a substantial gap in valuation expectations between sellers and buyers continues to be a hindrance to deal activity.

A Global Outlook for a Global Conference

Given that CPHI Barcelona is a global conference, it is imperative to broaden our perspective beyond the confines of the US to obtain a comprehensive understanding of the industry landscape. Many non-US firms and strategics are seeking to invest capital in North America, with a particular emphasis on opportunities emerging within the US. This international interest underscores the global nature of the pharmaceutical and healthcare sector, as market participants seek strategic investments and collaborations beyond their domestic borders.

Bourne's Continued Success

Our Investment Banking practice remains incredibly active. Historically, Bourne has been heavily focused on supporting founder and family-owned businesses. As such, owners or key stakeholders in these businesses are seeing the current level of turmoil as a motivator to pursue monetization events while valuations across the Pharma Services industry remain at attractive levels and well above historical averages. Bourne continues to see strong interest from both Strategic and Financial buyers for quality assets with seasoned teams across the majority of sectors and sub-sectors in our coverage areas.?

If you're considering a recapitalization or monetization event we'd welcome the opportunity to learn more and explore ways we might support your strategic plan. Contact us here.?

Conclusion?

Our team thoroughly enjoyed the opportunity to connect with industry leaders and financial investors in Barcelona. Bourne Partners will be attending all major upcoming industry conferences and looks forward to meeting with management teams in attendance to continue the dialogue. See our events page for details and contact information.?