U.K. companies in the healthcare sector are seeking international penetration, either organically or through M&A deals, to gain access to larger addressable markets.

M&A Market in the U.K.

Demand pressures, staff shortages, patient empowerment and technological advancement have spawned a new wave of innovative companies serving the U.K. healthcare market, which is dominated by a single player — the National Health Service (NHS). Tech-enabled and SaaS-based businesses are in demand as recent NHS reform has made digitization a central focus. It has historically been challenging for small businesses to achieve traction within the NHS, but the NHS is now actively supporting and seeking innovative digital technologies, increasing opportunities and funding for private companies.

As these companies reach maturity and saturation in U.K. markets, they are looking internationally to reduce concentration risk and gain access to larger addressable markets. Scaling internationally is often a challenge for these companies, and few have successfully exported their technology organically. Where there is an international opportunity, particularly in the U.S., interest is increasing — from private equity investors, often in parallel to trade interest. 

Simultaneously, on the life sciences side, we are seeing strong interest in outsourced services companies that specialize in the commercialization of biopharma products, particularly as pipelines become increasingly personalized and complex. Companies providing solutions to successfully clear increasingly rigorous regulatory and reimbursement hurdles (e.g., market access, real-world evidence, patient engagement and adherence) are attracting strong interest, particularly those companies that are data driven and tech enabled. 

The Brexit Question

The healthcare sector is resilient and tends to be less impacted by major economic and political upheavals than other industries. M&A activity and deal completions have been relatively immune to the challenges associated with Brexit. However, as Brexit approaches and uncertainty about how the U.K. will depart the European Union remains, there has been a slight ebbing in interest in pursuing M&A.

International Moves by U.K. Companies

The pharmaceutical sector is an increasingly global industry, and M&A activity reflects this dynamic. A number of U.K. pharma outsourcing companies interested in achieving significant scale have, with PE backing, been looking to acquire U.S. firms. In some cases, U.K. firms have grown organically into the U.S. market, establishing their own offices in the U.S. The key incentive is the size and importance of the U.S. biopharma market; it is also the location where many global contracts are procured.

Countries such as Japan, China and India are also becoming areas for both organic growth and targeted acquisitions. In addition to being very large markets for pharmaceuticals, they present significant opportunities for U.K. companies offering pharmaceutical outsourcing services and digital healthcare solutions.

Consolidation Opportunities

The biopharma outsourced commercialization space presents an exciting opportunity for large-scale consolidation. There has been significant consolidation among contract research organizations (CROs), and the focus has shifted to later-stage companies. U.K. firms are looking to synergistically combine commercialization businesses to establish a spectrum of services that can effectively bring drugs to the market and preserve their market positioning.

There is also significant fragmentation in the digital solutions sector, but it is unlikely that a single digital platform could address all needs best, either in the pharmaceutical or the healthcare settings — hence, there is no obvious consolidation play. However, selected businesses offering integrated niche specialist digital solutions will likely be acquired and rolled into larger organizations.

Global Focus for Clearwater International Clearwater International is a global M&A and corporate finance advisor with 15 offices and 250 M&A professionals. We advise our clients on M&A, private equity and debt raising transactions, largely in the mid-market.

In addition to a truly international business, we have strong partnerships with firms that have an established presence in individual markets, particularly the U.S. We have extensive experience with pure healthcare, business services and technology companies active in the healthcare and life sciences sector and a highly seasoned team with strong credentials, who have brokered hundreds of deals.

We have an intimate knowledge of M&A transaction requirements across the world. We can find outstanding acquisition opportunities or the right buyer across borders. We offer tailored and strategic thinking to prepare companies for sale and, with our highly personable approach and technical knowledge, we help clients maximize their opportunities in an increasingly global market.