M&A activity among pharmaceutical outsourcing companies in 2006 was rapid. In this highly fragmented industry, consolidation often marked companies’ interest in establishing an international reach. Covalent Group’s acquisition of Remedium Oy is an example of this. Another trend was a shift among private equity firms towards expanding their portfolio outsourcing companies with an eye on long-term profitability, as was the case in Borealis/Ontario Municipal Retirement’s purchase of MDS Diagnostic Services. Some companies chose divestiture as a means to profitability, as there were more than a dozen sales of businesses in the sector in 2006. In the year to come, large and mid-sized companies will continue to expand their services and global reach through acquisitions, more pharmaceutical oursourcing companies will look to private equity firms as potential buyers and the number of divestitures will increase.

Source: Contract Pharma