Acquisitions of pharmaceutical contract manufacturing organisations (CMOs) are increasing, and the most common type of acquirer is private equity (PE) firms, which view the industry as a prudent choice for a return on investment, according to GlobalData.

The company’s report, ‘M&A in the Contract Manufacturing Industry: Implications and Outlook – 2021 Edition,’ highlights that between 2018 and 2020, PE firms have shown a rapidly increasing level of investment in the CMO industry. PE firms acquired almost 70 pharmaceutical contract manufacturing companies, and PE-backed CMOs acquired eight during 2018-2020. Private equity firms now own many of the world’s leading CMOs, such as Recipharm, Cambrex Corp and PCI Pharma Services.

Adam Bradbury, PharmSource Analyst, GlobalData, commented, “The Tax Cuts and Jobs Act of 2017, passed under President Trump, reduced corporation tax rates and made it more profitable to be a private equity firm. This has, in effect, increased the spending power of these companies and contributed to the rising levels of investment in the CMO industry.”

GlobalData’s report states that PE-backed CMOs will find they have a lot more financial support to add to their service offerings and value. All the top CMOs recently acquired by private equity firms were, in turn, active acquirers of other CMOs or contract manufacturing facilities.

Read more/Source: Express Pharma