1

CoConsumer

IndIndustrials

WtWaste &Energy

CnConstruction

HcHealthcare

TmtTechnology,

Media & Telecoms

BsBusinessServices

FdFood & Drink

THE PHARMA FAST 50

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2

FOREWORD

T he global pharmaceutical industry is enjoying a period of sustained growth, underpinned

by an ageing population and a rise in associated chronic conditions, changing lifestyles and a growing middle class in emerging markets. These factors are continuing to drive volume growth for medicines globally.

Notwithstanding these strong macro volume drivers, policy-driven changes (specifically, increased regulation and a move to outcomes-based reimbursement), together with the growing significance of generic competition, is driving big pharma to streamline its activities, consolidate to reduce costs and diversify geographically.

As big pharma focuses on what it does best – finding a drug and then bringing it to market – these companies have been undergoing an overhaul of their complex supply chains. They have made them more efficient and better able to manage and progress the new products coming down the pipeline – as well as cope with the ever-growing regulatory pressures around the globe.

This shift in focus has led to big pharma outsourcing more non-core activities and to look at procuring new expertise and capability to help it navigate this new environment. Alongside this, the need to introduce not just the next big drug, but also more personalised and tailored drugs for subsections of the population – or even individuals – is driving increased partnerships and M&A activity with biopharma.

The UK pharmaceutical industry is ideally placed to benefit from the market and structural changes highlighted above. It is a world leader

in R&D and innovation, and stands out for the quality of management and talent in both large pharma and also the growing number of small and medium-sized players. The industry has access to significant venture and development finance.

In recognition of this dynamic sector, we are launching the Catalyst Pharma Fast 50, which ranks the fastest-growing, privately owned pharmaceutical businesses in the UK on the basis of revenue growth over a two-year period.

Reflecting the trends highlighted above, one of the strongest subsectors in the review by both number of companies and highest performer is pharma outsourcing. There has also been strong representation from companies leveraging innovative technologies, product supply businesses (specifically generic suppliers) and pharmaceutical chains.

This report highlights the work of leading companies in each subsector. It also reflects interviews with leading industry figures and investors, who share their insights about how the sector has evolved and where it is heading.

The fundamentals of the sector remain strong. However, the

industry needs to continue to innovate to reflect the changing environment in which it operates. This will create opportunities for companies in the UK pharma industry over the next few years.

Justin Crowther,Partner, Head of Healthcare, Catalyst Corporate Finance

Tom Cowap,Pharmaceutical specialist, Catalyst Corporate Finance Healthcare Team

“In recognition of

this dynamic sector,

we are launching

the Catalyst Pharma

Fast 50, which ranks

the fastest-growing,

privately owned

pharmaceutical

businesses in

the UK”

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4

hile the pharmaceuticals industry is still enjoying high levels of profitability, the

major players are in an environment of mounting pressure on profits. This is creating a fundamental shift in the way the sector operates, generating opportunities for smaller, specialist firms across the supply chain.

Big pharma has seen top-line growth hit by the 'patent cliff', a lack of new medicines coming through their R&D pipelines and increasingly stringent and costly clinical trials. The development of science into usable treatment is becoming more expensive, as low-hanging fruit has already been captured. With the global cost of healthcare having risen from 8.5 per cent of GDP in 1995 to 10 per cent in 2014, companies have to present a solid, outcomes-based case to justify drug prices to consumers, regulators and governments.

These pressures have created new dynamics and opportunities for outsourcing firms along the supply chain. Big pharma looking to focus on its core activities and outsource specific expert activities has led to major growth in pharmaceutical

service-based companies. Those that bring focus and expertise to an area of the supply chain, and therefore cost savings and value-add to big pharma, have been rewarded with stellar growth. Specialisation helps lower costs, drive efficiencies and generate innovation.

The shift is a logical step for big pharma, according to Richard Grethe, one of the founders of Focus Pharmaceuticals, which was sold to AMCo (now part of Concordia International Corp). He is currently chief financial officer at medical animation pioneer Random42. He says the major drug makers are either concentrating on R&D to find the next big drug or are diversifying, “so the parts of the business that would have been historically part of the furniture are now outsourced. Big pharma wants to do what it does best, without taking on extra overheads when it doesn't need to.”

THE UK’S STRENGTH IN ‘NUTS AND BOLTS’ AND SCIENCE GENERATIONWhat does this leave big pharma with? Intellectual property creation

“Specialisation

helps lower costs,

drive efficiencies

and generate

innovation”

SMALLER PLAYERS MAKING BIG WAVES IN PHARMA SECTORAs the market changes, companies are focusing on improving efficiencies in their non-core activities

W

[Sp]

Sp

5

and acquisition, and then marketing, which smaller firms do not have the scale to afford. Grethe adds: “They have all the channels for marketing, that’s what they are good at. As for the nuts and bolts – infrastructure, logistics, sales force – they will outsource because it does not make sense not to these days.” Big pharma has been historically successful in finding the next big blockbuster and managing the product’s life cycle to maximise sales over 20 years. Now, that model has changed, with big pharma focusing on improving efficiencies in its non-core activities. This can be seen in the strong appearance of distribution firms in the Pharma Fast 50.

It is not just “nuts and bolts” outsourcing that has benefited from the pressure put on big pharma. “The UK has a real strength at the other end of the cycle: that is, coming up with the science. Then we tend to sell that to others,” says Amy Brown, news editor at EP Vantage, part of the commercial intelligence specialist Evaluate Group (and a leader in the consulting segment of the Pharma Fast 50). Evaluate Group is an example of a firm that has benefited from big pharma: not just looking to outsource “nuts and bolts” operations, but also looking to become more intelligent in its approach to the market and operations via increased use of consultants and market and commercial intelligence.

The best outsourcing companies “have been rewarded with stellar growth”, notes Leslie Morgan OBE, managing director of Durbin, adding that in the pharmaceutical industry, “marginal improvements can be the difference between regulatory approval and failure”. Durbin, another

Pharma Fast 50 company, sources and distributes pharmaceuticals, medical equipment and consumable supplies in over 180 countries. Its focused approach has been rewarded with more contracts from major pharma firms, according to Morgan.

PRIVATE EQUITY OPPORTUNITY The dynamics highlighted above make it an attractive sector for private equity. Given the growth in outsourcing (which is likely to continue to accelerate), smaller and medium companies have ambitious plans. Private equity is always attracted to businesses that have strong market fundamentals, ambitious growth plans and high-calibre management.

A supportive private equity investor can help accelerate growth,

open up new markets and provide capital for acquisitions. A number of companies in the Pharma Fast 50 have private equity shareholders including Quotient Clinical (backed by GHO Capital Partners) and LGC Life Sciences (backed by KKR).

Brown adds: “Private equity will naturally be attracted to companies capable of generating a lot of cash and growing fast. The fundamentals of the healthcare sector – an ageing population that is putting increasing demands on all aspects of healthcare systems and an industry largely immune from macroeconomic cycles – makes this a particularly interesting area in which to invest.”

SMALLER PLAYERS MAKING BIG WAVES IN PHARMA SECTOR

Pharmaceutical outsourcing M&A transactions

602009

702013

922014

912010

862011

852015

842012

Source: Capital IQ and Capstone Partners LLC research

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s the NHS shifts from doing everything in-house to outsourcing more, a host of

opportunities have been created for specialist services across the value chain. Qualasept Pharmaxo Holdings has seized these opportunities.

Its Bath ASU unit has grown into the largest private aseptic compounding provider in the UK, and has been posting growth rates in the region of 75 per cent for the past three years. Its success has been rewarded with the company being named as the overall winner of this year’s Catalyst Corporate Finance Pharma Fast 50.

CASE STUDY

SPOTLIGHT ON BATH ASU, WINNER OF THE PHARMA FAST 50

A

6

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Hospitals are looking for alternatives to in-house compounding, as costs are cut and treatments become ever-more complicated

house are made by those with sound knowledge of the relevant processes, products and patient needs.”

Mr Watt says compounding is an area that is becoming increasingly complicated. “Thirty years ago, cancer treatment usually involved one chemotherapy course of treatment with one drug in the regimen. Now it is two-to-three courses of treatment and can be two-to-three drugs in the regimen. As demands have increased, regulators are raising the bar in terms of product quality and the facilities used, and it is hard for hospitals to maintain those standards."

So what does Bath ASU do? Chris Watt, the unit’s operations director, explains that the Wiltshire-based company buys licensed injectable drugs from big pharma and generic pharmaceutical companies and makes them ready for use in hospitals across the UK – 2,300 items are sent out each day.

Watt notes that while some hospitals may have small numbers of staff working on compounding – where ingredients are mixed to create personalised medications for patients – Bath ASU has over 150. “We can provide a reliable and safe service and carry all the scientific disciplines you need internally to do a great job: chemistry, pharmacy and microbiology.”

He adds that the company has an in-house R&D team, whose stability research has resulted in extending the shelf life of some of the biggest-selling biological drugs on the market. Hospitals are buying Bath ASU’s ready-to-use products because they are of a higher quality and more convenient and economical than in-house products.

Skills development is pivotal to such a large team, Watt adds. Bath ASU’s internally designed training is fully accredited by EdExcel and NCFE, leading to full qualifications – 232 in 10 years.

Unusually, Bath ASU has also delivered training to 145 NHS colleagues. Watt believes that raising knowledge and skills about compounding is good for everyone: “Effective decisions about what to outsource and what to keep in-

CASE STUDY

SPOTLIGHT ON BATH ASU, WINNER OF THE PHARMA FAST 50

7

[Ba]

“Regulators are

raising the bar in

terms of product

quality and the

facilities used”

8

THE

FAST

50

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Qualasept Pharmaxo

Crescent Pharmaceuticals

Sygil Group

Crawford Healthcare

Lexon (UK)

Durbin PLC

Quanticate

Nucleus

R K Aggarwal

Qph

Cp

Sg

Chh

L

D

Q

N

Phlexglobal

3VS UK

Evaluate Group

Chemilines Group

Chemidex Pharma

Mediwin

Day Lewis PLC

Laxmi BNS

PillBox Chemists

Pl

3Vs

Eg

Clg

Cp

M

Dl

Lbn

Pbc

Quotient ClinicalQc

Rka

15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

16

17

18

19

Laville

H2H Pharmacy

Centaur Healthcare

PCT Healthcare

The Research Partnership

London Pharma & Chemicals

L

H2h

Che

Pct

Rp

Lpc

20

21

22

23

24

25

29

30

31

32

33

34

35

36

37

38

39

40

41

42

M & D Green Dispensing Chemist

Clarity Pharma

J M McGill

Aspar Pharmaceuticals

Nova Bio-Pharma

EMT Healthcare

Dudley Taylor

Diomed Developments

Borno Chemists

M Farren

Blacktrace

Pharmacy2U

OBG Pharmaceuticals

Waremoss

M&d

Cph

Jmm

Ap

Nbp

Emt

Dt

Dd

Bc

Mf

B

P2U

Obg

Wm

Masters Pharmaceuticals

K.S.C. 1T

Custom Healthcare

Mp

Ksc

Ch

26

27

28

43

44

45

46

47

48

49

50

Mayberry Pharmacy

H J Everett (Chemist)

LGC Science

Paydens Group

Coopers Chemist Marske

Knights Chemist

Omnicare Pharmacy

Knight Noise

Mp

Hje

Lgc

Pg

Ccm

Kc

Op

Kn

SoaQcGiuF5BaSp

T/o LTM: £264.5m

Dl

Pharmacy

15%

F5

75%T/o LTM: £48.7m

Makes ready-to-use injectable medicines for NHS and private hospitals

Benefiting from increased outsourcing and a differentiated offering

LPharmaceutical distributor and retailer

T/o LTM: £60.1m

Distributes pharma-ceuticals, medical equipment and medical supplies

T/o LTM: £32.4m

Manufacturers generic and branded products

T/o LTM: £11.4m

Integrated drug discovery resource and expertise

T/o LTM: £21.5m

Supplies dermatologyand woundcare products

Pharma outsourcing

Growth driver (top 10 only)

Develop and supply

Pharmacy chain

Consulting – other

Activity

Rank

Two-year CAGR

LTM = Last Twelve Months

T/o LTM: £200.0m

#

%

D

T/o LTM: £16.8m

Clinical research provider

Q

Sg

Cp

Qph

Chh

Investment in staff achieving more favourable prices

International growth and performance of woundcare products like KerraPro

Won large-scale, multi-year strategic partnerships with leading pharmaceutical companies

Used innovative sales methods such as their app "Pillmanager"

Significant investment to build a global footprint

Successfully developed its global network and specialist distribution channels

T/o LTM: £70.8m

NMedical communications agencies

Retained focus on its core activity and developed deep expertise

34%

28%

26%

26%

24%

24%

23%

1

2

3

PlElectronic trial master file systems and services

T/o LTM: £20.1m15%

4

T/o LTM: £191.1m

LbnSupplies pharmaceutical products to pharmacies

15%5

Investment in new product licences and historically favourable exchange rate helping drive growth

T/o LTM: £68.3m

Develops and sources pharmaceutical products into the UK for the domestic market and for export

3Vs22%

10

T/o LTM: £16.7m

Commercial intelligence for the life science industry

Eg20%

11

T/o LTM: £51.6m

ClgImport, wholesale and distribution of pharmaceutical products

19%126 T/o LTM: £38.5m

Early-stage and specialist drug developer

QcApproach allowed drug development timelines to be cut by six months or more

22%9

7

8

CpLicenses and markets prescription pharmaceuticals

T/o LTM: £29.7m17%

13

T/o LTM: £38.9m

MImporting and redistribution of pharmaceutical products

15%14

T/o LTM: £264.5m

Dl

Pharmacy

15

T/o LTM: £10.0m

M&d

Pharmacy

T/o LTM: £66.8m

Wm

Pharmacy

T/o LTM: £13.5m

T/o LTM: £7.9m

T/o LTM: £21.8m

T/o LTM: £17.6m

T/o LTM: £16.5m T/o LTM: £12.0m

T/o LTM: £16.6m

T/o LTM: £48.2m

T/o LTM: £26.2m

T/o LTM: £39.1m

Ksc

Pharmacy

Jmm

Pharmacy

PctRetail and wholesale pharmacy

CheManufactures healthcare products

ChManufactures pharmaceutical and healthcare products

ApSupplies analgesics to pharmacies and grocer sector

Emt

Wholesaler to pharmacies

CphPharmaceutical consultancy

RpHealthcare market research and consultancy

L

Pharmacy

MpDevelopment and manu-facturing organisation for investigational medicinal products

H2h

Pharmacy

NbpSupplies specials and clinical trial medicines

THE FASTEST GROWING PHARMA COMPANIES

T/o LTM: £31.8m

T/o LTM: £11.5m

T/o LTM: £74.6m

T/o LTM: £10.5m

T/o LTM: £13.1m

Rka

Pharmacy

LpcSupply, promotion and distribution of specialty ingredients and pharmaceutical products

14%

14%

14%

13%

13%

11%

11%

10%

10%

10%

10%

10%

8%

9%

9%

8%

8%

PlElectronic trial master file systems and services

T/o LTM: £20.1m 16

33

32

31

T/o LTM: £191.1m

LbnSupplies pharmaceutical products to pharmacies

17

34

Pbc

Online pharmacy

T/o LTM: £25.0m

14%18

35

21

22

23

19

20

28

27

24

2925

3026

[F5]

THE FAST 50

T/o LTM: £7.8m

T/o LTM: £137.8m

T/o LTM: £60.8m

T/o LTM: £7.7m

T/o LTM: £15.0m

T/o LTM: £63.4m

T/o LTM: £11.0m

T/o LTM: £17.5m

T/o LTM: £8.9m

Bc

Pharmacy

ObgPharmaceuticals products manufacturer

Mf

Pharmacy

Mp

Pharmacy Retail dispensing chemist

Pharmacy

P2U

Pharmacy

T/o LTM: £13.4m

Hje

Pharmacy

Ccm

Kc

Op

Dt

Pharmacy

Pharmacy

DdManufacturers of pharmaceuticals

BDevelops and manufactures scientific products

PgWholesale and retail distribution of pharmaceutical goods

T/o LTM: £209.8m

LgcLife sciences measurement and testing

PHARMA FAST 50 METHODOLOGY The Catalyst Corporate Finance Pharma Fast 50 lists the fastest-growing, privately owned businesses that serve the UK pharmaceutical industry, ranked by revenue growth over a two-year period.

CRITERIA FOR INCLUSION The Pharma Fast 50 assesses pharmaceutical businesses that are registered in the UK as private, independent and unquoted companies. This category includes private companies backed by private-equity funders. Entities that are part of wider corporate groups qualify for inclusion provided their parent company’s activities are not pharma related. To be considered for inclusion, companies are required to achieve annual revenues of £5 million or above in the first year of assessment. In addition, entrants are required to have filed three consecutive years of financial statements at Companies House, with the most recent statements dated no earlier than 1 January 2014. Filed accounts must also show two successive years of revenue growth. Unaudited management accounts have not been accepted due to the absence of third-party validation. Companies that have shares listed on a stock exchange, or where any of their shares are held by a UK or overseas quoted company, local authority or county council, will not qualify for inclusion.

DATA COLLECTION METHODS Pharma Fast 50 entrants have been identified using data published at Companies House as at 29 November 2016, or through assessment of audited accounts directly submitted by industry participants. We have interviewed a selection of the companies on the list to understand the stories behind the growth and to ensure the Pharma Fast 50 is as accurate as possible.

T/o LTM: £65.2m

T/o LTM: £13.6m

T/o LTM: £11.8m

6%

7%

8%

5%

5%

5%

5%

5%

5%

4%

4%

4%

4%

4%

43

42

41

44

45

38

37

36

39

40

48

47

46

49

T/o LTM: £13.0m

Kn

Pharmacy

3%50

SoaQcGiuF5BaSp

12

hile big pharma has been battling to cope with patent expiries, a huge

opportunity has arisen for generic companies, and especially those players focused on the UK market.

With savings on medicines being very much a focus for the National Health Service, generics are a key focus in government strategy for cost-effective treatment. Indeed,

the proportion of UK prescriptions written generically increased from 71 per cent in 2000 to 83 per cent in 2007 and 84 per cent in 2013/14.

Following the patent expiry of Johnson & Johnson’s antipsychotic Risperdal (risperidone) in December 2007, a 90 per cent discount off the innovator price was immediately available, quickly increasing to 98 per cent. It is estimated that the increase in generics has saved the NHS £7.1 billion since 1976 and allowed 490 million more items to be prescribed without an increase in total spending.

Big pharma, including the likes of Teva, Mylan and Novartis unit Sandoz, is still a big player in the generics space but there are opportunities for smaller companies. According to an industry expert at a leading generic UK pharmaceutical research and development company, the major companies are run on a global basis and their decision-making often means that the UK is not a priority from a development point of view.

Focus Pharmaceuticals, founded in 2003, was one of the first companies to see the opportunity of focusing on branded and generic niche medicines for the UK. Its strategy was based around product-specific opportunities, entering areas where there may be a couple of competitors rather than tackling the mass market, thus offering something different to the global giants.

By the time Focus came under the ownership of the AMCo group (now part of Concordia International Corp) in October 2014, it had 110 products in its portfolio, 30 of which were exclusive, while another 30

GENERICS IN THE UK Firms see opportunity to focus on generics in the UK

[Giu]

Giu

W

“The future looks

promising for those

groups who understand

the UK as a key market

in its own right, not a

small part of a massive

global enterprise”

13

were one of only two products in the UK market for their respective therapeutic categories.

The Focus path has been followed by a number of other generics players, notably Crescent Pharmaceuticals Limited. The latter currently manufactures approximately 150 generic and branded products, exporting these to over 16 territories globally but retaining a primary focus on the UK market. It is growing strongly, coming top in the development and supply category of this year’s Pharma Fast 50.

While generics have driven huge cost savings for the NHS (where competition has driven companies into efficient pricing), due to their

non-tariffed nature there have also been concerns raised about excessive price rises on generics drugs. Unlike branded drugs, the government does not set pricing for generic products. This has allowed firms to “debrand” a drug before relaunching a generic version at significantly increased prices. The resulting negative publicity around perceived profiteering has pushed the government to legislate. The Health Service Medical Supplies (Costs) Bill currently going through Parliament is expected to impact the pricing of unbranded generic

GENERICS IN THE UK

Generics projected to take a larger share of total global medicine spend

2012

2017

Source: 2016 Global life sciences outlook, DTTL Life Sciences

$261 bn

$421 bn

27% of global medicine spend

36% of global medicine spend

$967 bn

$1,169 bn

medicines where competition in the market has failed and for which suppliers have increased prices. These drugs, however, represent a very small proportion of the generic market in the UK, and are primarily provided by big pharma.

Crescent is one of a number of UK-based companies that has been able to apply its local knowledge to create niche markets for generics. The future looks promising for those groups who understand the UK as a key market in its own right, not a small part of a massive global enterprise.

SoaQcGFpF5OGSd

14

nnovation is very much the watchword in the pharmaceutical industry, and

the sector has been pretty successful in the last few decades. However, when it comes to putting promising compounds into development, big pharma has struggled to control spiraling costs from clinical trials that have been getting larger and longer.

Solutions to these problems also require innovation. A number of service companies have come up with highly innovative business models to improve R&D productivity. Chief among them is Quotient Clinical, a

Nottingham-based company that has ranked highly in the pharma outsourcing category.

The company has pioneered a new way of working, which it calls Translational Pharmaceutics, that “challenges conventional thinking – breaking down embedded industry silos and enhancing the way in which our customers can design and implement their drug development programmes”, according to Chief Executive Mark Egerton.

Put simply, Quotient can integrate formulation development, real-time GMP manufacturing and clinical

testing, taking drugs through early-stage development to proof of concept far more efficiently than the conventional route. Within its Nottingham facility, the manufacturing suite is located just one floor above the 85-bed clinical trial unit, which Dr Egerton says, “creates the opportunity to modify dose and formulation in real time in response to emerging clinical trial data”.

The advantages for customers are significant, Dr Egerton argues. These include potentially reducing overall drug development timelines by six months or more, cutting costs and streamlining outsourcing processes. “Just as importantly, this approach brings innovative thinking into early-development programmes,” he adds.

This innovative business model is clearly bearing fruit, as Quotient has built an international customer base. By the end of 2015, it had achieved revenue growth of 25 per cent per year for the last four years – and growth is forecast to continue in the foreseeable future. Earnings before interest, taxes, depreciation and amortisation for the last three years has grown by 280 per cent, “which we believe represents best-in-class in our segment”, Dr Egerton states.

In 2015, Quotient expanded its formulation development service by acquiring Co-Formulate, which is based close to the facility in Nottingham. In response to growing demand, the company’s workforce has expanded by more than 40 per cent over the last year and manufacturing capacity has doubled. It seems innovation is alive and kicking in the East Midlands.

CASE STUDY

SPOTLIGHT ON QUOTIENT CLINICAL

[Qc]

I

Quotient Clinical is leading the trend for growth and innovation

15

T he world’s growing and ageing population, an increasingly wealthy and health-aware

middle class, and increasing demand for drugs in the developing world are all strong drivers for further growth in the pharmaceutical industry, with predictions that the market will be worth $1.3tn by 2020.

Against this backdrop, competition, reimbursement and technological changes are accelerating and driving big pharma to reshape and adapt its strategies, increase productivity, reduce costs and develop new treatments. Patients, individuals,

governments and regulators are also challenging old paradigms and looking at new models – whether that is governments changing the way they pay for drugs or patients willing to embrace new technologies, approaches and treatments.

The overall objectives appear relatively clear: to provide effective drugs and more personalised medicines that reach more people at an overall lower cost. And alongside this, more prevention and less treatment.

Therefore, three key trends will continue to drive the industry: greater outsourcing, increased

SIGNIFICANT OPPORTUNITIES AHEAD Demographic and social change is set to propel the industry over the next decade

[Soa]

SoaSoaQcGiuF5BaSp

17.4 | Spain

27.5 | UK

28.7 | Italy

29.8 | France

43.4 | Germany

EU-5 forecast pharma sales 2022 (€bn)

Source: Evaluate, 2016

personalisation of medicines and greater use of technology.

GREATER OUTSOURCINGThe core competency of drug discovery now lies as much with smaller, more innovative scientific research companies as with big pharma. New solutions will be increasingly developed through partnerships with smaller, focused research organisations. This, together with various aspects of clinical development, regulatory compliance, manufacturing and marketing, presents great opportunities for specialist pharmaceutical companies.

The trend to outsource will continue and will grow into new areas, while the well-established outsourcing areas are likely to be consolidated. Christoph Ruedig, a partner at healthcare-focused Albion Ventures, notes that, “traditionally, big pharma likes to play with big CROs (contract research organisations): the likes of Quintiles, CoValence, Parexel, Icon and PRA Health Sciences. This is likely to lead to more consolidation in the CRO arena, and in the future the smaller players will need to show real differentiation.”

PERSONALISATION AND OUTCOMES-BASED PAYMENTSThe industry is moving towards an outcomes-centric rather than product-centric model. Industry expert Steve Kent, who advises a number of private equity-backed firms, notes that “as we age we cannot afford the rising cost of our healthcare. Consequently, we are transitioning to an outcomes-based system that rewards organisations for the effectiveness of the medical intervention rather than how much is consumed. This is disrupting the established pharmaceutical ecosystem. Pharma companies will increasingly be paid for the effectiveness of the treatment, not the pill.”

16

This is driving an increased push, together with a consumer and patient pull, for personalised medicines. The exponential growth of data and scientific advancement will help pharmaceutical companies better tailor drugs and associated delivery systems to the individual. Oncology is a good example of where significant resources are being devoted in this area. Scientists are examining the genetic fingerprints of cancer to find better treatments. This, together with a greater understanding of the human genome, is allowing patients to receive highly targeted and effective treatments. Technology and scientific developments are lowering the cost of

genome sequencing.The importance of this can be seen

across the industry. Big pharma has been willing to contribute its cash and resources to Genomics England’s unique private–public Genomics Expert Network for Enterprises (GENE) programme, partly to access the anonymised big data that will be generated. The UK is at the forefront in this area.

WEARABLE TECHIndustry veteran Richard Grethe, currently chief financial officer at the medical animation firm Random42, says that, “there are going to be many

FORWARD IN THE PHARMA SECTOR

changes over the next ten years and wearable tech is going to be increasingly important.” Technology giants like Google and Apple will continue to make advances into the healthcare space, Grethe believes, and although they have focused on the consumer wellness side of things (making use of the ubiquitous smartphone), the future will see medical use of wearables for collecting real-world data and monitoring patients in clinical trials.

Ruedig concurs, saying that when looking at investing in the healthcare space, Albion Ventures is particularly interested in the medical technology and digital space rather than drug development. The cost of backing firms involved in the latter is “way too high to make sense” for many venture capitalists – what interests them are businesses that will double or triple in size during the investment period.

He believes that there are “pockets of strong innovation” that can play a key role as the pharmaceutical industry goes forward in the next decade. These will help to bring more tailored and affordable options to ease the strain on healthcare systems.

UNBOUNDED POTENTIALThe UK pharma industry is well positioned to benefit from the opportunities and structural changes highlighted above, despite short-term uncertainty associated with Brexit. A combination of great science, an extensive talent pool and availability of capital, together with the presence of major global pharma players, will continue to drive the growth of the businesses in the Pharma Fast 50. Beyond this list there are other fast-growth companies – whether they be product providers, outsourcing businesses, pharmacy chains or consultants – that are working extremely hard to deliver products and solutions that, ultimately, will improve the health of the population.

Marketed vs. R&D (€m): historical and forecast sales to 2022Products currently in R&D

At Catalyst we focus our activity in the healthcare sector on the following key areas: pharmaceuticals (products and services), healthcare services and medtech (devices and supplies).

An overview of our recent healthcare credentials

Acquired the European equine product range of

Growth capital fund raising

Acquired by

a portfolio company of

Acquisition of

MBO

Sale to

Minority stake inwww.catalystcf.co.uk

Healthcare sector

Pharmaceuticals

Medtech

Healthcare services

SMART ADVICECatalyst advises business owners and management teams on:

• Company sales• Management buy-outs

and buy-ins• Company acquisitions• Raising private-equity

capital• Raising and refinancing

debt capital

GLOBAL REACHOur international partnership is present in 50 cities worldwide, provides:

• Access to overseas buyers

• Local insight into M&A culture and likely tactics

• Identification of overseas targets and acquisition execution

• International M&A research

SECTOR COVERAGEWe have in-depth knowledge of the sectors our clients operate in:

• International sector teams understand industry trends and issues

• Cross-border relationships with strategic acquirers and capital providers

• Regular primary research output

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© Catalyst Corporate Finance LLP 2017

Catalyst Corporate Finance LLP is authorised and regulated by the Financial Conduct Authority (number 478406)

Catalyst Corporate Finance LLP is a limited liability partnership registered in England & Wales (registered number OC306421)

Registered office: Bank House, 8 Cherry Street, Birmingham, B2 5AL

www.catalystcf.co.uk

Birmingham

16th Floor, Bank House8 Cherry StreetBirmingham B2 5ALT +44 (0) 121 654 5000

London

2nd Floor77 Queen Victoria StreetLondon EC4V 4AYT +44 (0) 20 7246 0500

Nottingham

21 The Triangleng2 Business ParkNottingham NG2 1AET +44 (0) 115 957 8230