Crosstree Capital Partners, an investment banking company specializing in advising middle market companies in the drug and device outsourcing industry, has released its second quarter 2013 Drug and Device Outsourcing Industry Monitor.
The brisk pace of mergers and acquisitions, which surged at the end of 2012, continued through the first half of 2013 as both strategic and financial buyers remained active. The development and contract manufacturing segments were the most active, and deal activity in Europe increased considerably.
Private placement activity fell for the second consecutive quarter as a result of a slowdown in European investments.
Revenue- and earnings-based valuations increased across nearly every segment in the industry. The Crosstree Capital Partners Drug and Device Outsourcing Index climbed 4.6% in the second quarter, rising for the third consecutive quarter.
Private placement and M&A deal activity spiked during the fourth quarter of 2012 across all industry segments, according to Crosstree, as the result of a rush to get deals done before tax increases took effect in 2013. As a result, M&A deal volume expectedly dropped across all segments during the first half of 2013, the exception being the development segment. M&A volume was virtually unchanged from the first to the second quarter.
Strategic buyers are expected to continue to look at acquisition prospects for growth, and PE firms to continue to seek platform companies, Crosstree said.