A Growing Market & M&A Opportunity
For decades, pharmaceutical companies have experienced rising pressures on their business models, causing a heavier reliance on outsourced providers to better manage their key operations. While the outsourced pharma services sector is well established, the same outsourcing shift is just beginning in medical devices.
Now facing similar industry challenges like greater product development and regulatory complexity, medical device manufacturers are rapidly turning to experts in design and engineering, regulatory affairs, clinical trials, and commercialization.
These professional services are becoming increasingly essential and growing quickly as medical device manufacturers focus on core competencies and establish efficiencies across their value chains. This presents tremendous value-creation opportunities for investors ready to capitalize on this outsourcing trend and get in early on the market’s growth curve.
The Key Strategy to Unlock Full Value
Significant white space exists in this nascent market, which is primed for professionalization and consolidation. Due to the subsector’s high fragmentation, a winning investment strategy is to find a top-performing asset in one of the four service areas shown in the figure and provide its existing client base with a more comprehensive suite of solutions. By building a multi-service platform that addresses a variety of needs, medical device professional services companies can form long-term, sticky relationships with device manufacturers looking to consolidate multiple providers into a single source.
RQM+ and Jordi Labs: Exemplars in the Space
As an example of this value-creation strategy, Harris Williams clients RQM+ and Jordi Labs recently joined forces to offer customers more comprehensive solutions.
RQM+, a regulatory and quality consulting business, acquired Jordi Labs, which specializes in analytical chemistry testing required by regulatory bodies such as the FDA. Both companies have benefited greatly from rising medical device regulatory scrutiny, but have also been limited to their respective niches.
Together, they now offer a comprehensive outsourced solution for all their clients’ regulatory needs, managing every aspect of a medical device’s required filings and tests to get it approved more easily, efficiently, and cost-effectively.
By combining their complementary services into an integrated offering, RQM+ and Jordi Labs can do more for their clients while generating additional growth and value in the process.
In addition to covering medical device professional services, the Harris Williams Healthcare and Life Sciences Group has wide-ranging experience in other subsectors.
To learn more, please contact our senior bankers.