Alantra Pharma Fast 50

THE PHARMA FAST 50

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Foreword

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he UK’s pharmaceuticals industry is a global leader, bringing its inspiring research and development, ground breaking innovation and intellectual capital to some of the world’s most difficult problems. These qualities have never been more needed. In the West, where the population is ageing and chronic conditions are therefore increasing, new drugs and treatments are required. In developing economies, meanwhile, the demand for medicines comes from a rapidly growing middle class. And all over the world, cost-effective and practical healthcare solutions are vital. The UK’s pharmaceutical sector contributes in different ways. It includes big pharma – large corporates operating multi-nationally to deliver medicines at scale – as well as academia, with British universities and their research partners delivering a near-constant stream of vital breakthroughs. Crucially, the sector also includes a vital layer of small and medium-sized firms offering more specialised products and services. These companies, very often privately-owned, power the industry. For example, they provide a vital outsourcing service, delivering high-quality services in areas where big pharma is not able to look beyond the core. They provide crucial development assistance and consultancy services. And they are often to be found in key areas of the distribution chain – including customer-facing pharmacy services.

The Alantra Pharma Fast 50 recognises the achievements of these remarkable companies; it ranks the UK’s fastest-growing, privatelyowned pharmaceutical businesses by their revenue growth, providing a snapshot of the small and medium sized companies that do not always receive the credit they deserve. This is the second year in which the index has been published. It has been compiled by Alantra, which last year merged with Catalyst Corporate Finance, responsible for the 2017 Pharma Fast 50. And like last year’s ranking, it identifies dozens of impressive companies, often growing at double-digit rates with products and services their customers could not do without. The outlook for a sector that is underpinned by these success stories is bright. Pharmaceutical companies continue to face challenges – and the UK’s departure from the European Union has created further uncertainties to add to difficulties such as regulatory reform, government austerity and the margin pressures on big pharma the world over. Nevertheless, the businesses identified in the 2018 Alantra Pharma Fast 50 are confronting these headwinds, innovating and evolving to continue to prosper in the changing environments in which they operate. Alantra is delighted to pay tribute to these companies and the talented management teams and workforces driving them forward. They will ensure the UK’s pharmaceutical industry retains its status on the international stage, whatever the challenges that lie ahead.

The Alantra Pharma Fast 50 recognises the achievements of these remarkable companies, ranking the fastestgrowing, privatelyowned pharmaceutical businesses in the UK.

1. JUSTIN CROW THER PARTNER – HEALTHCARE, ALANTRA 2. TOM COWAP DIRECTOR – HEALTHCARE, ALANTRA

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OVERVIEW

All change for pharma The constituents of the Alantra Pharma Fast 50 are innovating at speed to secure long-term growth

a number of private equity-backed firms in the sector. “The model of how we deliver healthcare has to change. Every country is struggling with the demand from healthcare taking a rapidly increasing proportion of GDP” he says. “The sector is based on silos which can lead to tremendous inefficiency. New collaborations are essential to disrupt traditional models and allow the adoption of new ideas and the technologies that enable them such as valuebased healthcare, digital healthcare and patient engagement and self help.”

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Many of the constituents of the Pharma Fast 50 provide good examples of such innovation. In consulting, for example, medical education and communications firms are focused on building data-based evidence for drugs and treatments that incorporate healthcare economics as part of their key value metrics. Amongst the pharmacy chains, the leading businesses are collaborating more closely with partners ranging from clinicians to big pharma in order to broaden their businesses and ease the strain on the NHS.

he UK’s privately-owned pharmaceuticals businesses are growing rapidly. The top 10 businesses in this year’s Alantra Pharma Fast 50 have each achieved annualised revenue growth of at least 43% over the past two years, building value across a diverse range of disciplines and specialisms. This success, moreover, has been achieved despite some potentially difficult headwinds, including a tough spending settlement for public health, further regulatory reform, pressure from big pharma companies suffering their own margin challenges and even the spectre of Brexit. All these pressures might have been expected to limit growth. The prosperity of the Pharma Fast 50 constituents against this difficult backdrop reflects their determination to focus on both the long-term value in healthcare – the UK’s ageing population will mean steadily increasing demand – and the short to medium-term challenges of unlocking that value, both for commercial success and improved patient outcomes. While the demographics of healthcare bode well for the pharmaceutical sector, the most successful businesses recognise the imperative for new thinking, says Steven Kent, an industry veteran who advises, and sits on the board of,

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Digital transformation is also part of the change story, and this is being adopted quickly by UK businesses according to Guido Siebiera, our European consumer healthcare specialist based in Spain. “The NHS is tough for international players to deal with, which has traditionally put some investors off; the UK has often been excluded from internationalisation. But digital is changing the rules, particularly with UK companies selling around the world, which has increased their attractiveness to overseas buyers” he says. Again, digital is a theme that has supported growth for a number of Pharma Fast 50 constituents, albeit in a variety of different ways. In the outsourcing sector, for example, contract research organisations are increasingly applying big data tools to improve the efficiency of both research and trials. Wholesalers and

OVERVIEW

distributors, meanwhile, are developing new digital capabilities as part of an increasingly multi-channel offer. More generally, the leading businesses in each of the Pharma Fast 50 sub-sectors are focused on driving value creation – for payers, patients, biotech startups and big pharma alike – in their own way. From outsourcing companies helping biotechs and big pharma bring better drugs to market more quickly, to developers capitalising on the UK’s strengths in R&D in areas such as gene therapy, these businesses are succeeding precisely because they recognise the powerful drivers for change in healthcare. They will sometimes need help. On Brexit in particular, Aubrey Powell, sector lead for healthcare and life sciences at the Equity Capital Markets specialists, N+1 Singer, says: “The Government’s Industrial Strategy for Life Sciences considers a wide range of incentives – among them grants, loans, ‘in-kind’ support, capital allowances, other investment incentives and regional initiatives – which should help ensure that funding for R&D and manufacturing doesn’t disappear from the UK following Brexit. Steps have also been proposed to establish a migration system allowing the UK to recruit and retain the best international talent, from the EU and beyond.” Still, in a period of uncertainty and change, it is agile and flexible businesses that are most likely to perform strongly. In this regard, the Pharma Fast 50 businesses have an advantage over their larger, publicly-listed counterparts, operating with lean management structures and an entrepreneurial culture; in many cases, these businesses are still run by their founders. Indeed, this year’s Pharma Fast 50 proves once again that the UK’s pharma industry has both depth and breadth – and the smaller, privatelyowned companies in the sector are now set to continue building on these impressive returns.

THE PHARMA FAST 50

The Alantra Pharma Fast 50 The Alantra Pharma Fast 50 ranks the UK’s fastest-growing, privately-owned pharmaceutical businesses according to their revenue growth over the past two years (the businesses must have reported revenues of more than £4m in the first year of assessment to be included). It includes analysis of businesses grouped into four distinct sub-sectors – Pharma outsourcing; Pharmacy chains; Development, wholesale and supply (DWS); and Consulting. This year’s leaders are: Overall: Qualasept Pharmaxo (see page 6)

Pharma outsourcing: Simbec-Orion (see page 7)

Pharmacy chains: Gorgemead (see page 9)

Development, wholesale and supply: Immunocore (see page 11)

Consulting: Random42 (see page 13)

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How Qualasept Pharmaxo Holdings did the double

Compounding specialist Qualasept Pharmaxo Holding’s stellar growth sees it top the Pharma Fast 50 for the second year running

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the ordering process; that may mean we need to move inside their systems to provide support with all their aseptic ordering, internal and external.”

CASE STUDY

ith annualised revenue growth of 69% over the past two years, Qualasept Pharmaxo Holdings Ltd (QPHL) is this year’s top-ranked company in the Alantra Pharma Fast 50. That makes it the UK’s fastestgrowing privately-owned pharmaceuticals business for the second year in succession – QPHL also topped the Pharma Fast 50 in last year’s rankings.

QPHL’s human capital, meanwhile, has increased in both number and calibre; the company has added to its workforce, but it is also a committed investor in training and skills. As the business has grown, Watt explains, leading the larger workforce has required new structures and management practices and he and his colleagues have had to adapt accordingly.

QPHL’s Bath ASU unit is the UK’s largest private aseptic compounding provider, supplying hospitals up and down the country with the personalised medicines their patients require; it despatches several thousand items each day.

The onus on the company now is to build on its success. In part, that will be enabled by both new and stronger relationships with the pharma companies from which it sources the drugs required for its compounds. “We’re finding it easier to manage our suppliers as we’ve grown because we’re seen as offering more potential for sales growth,” Watt says.

Chris Watt, the company’s CEO, pinpoints two explanations for the company’s rapid growth. “We’ve been a committed investor in the product portfolio and our ability each year to extend the shelf life of six to ten biological products secures us windows of opportunity in which we’re often the sole supplier of those products,” he says. “At the same time, we’ve invested very heavily in our capacity – physically, but also in people.” Last year, the company brought a new 2,500 square metre manufacturing plant online, enabling it to scale up production but also to improve efficiency, with facilities designed on a bespoke basis to boost throughput. “For example, we’ve significantly reduced the time it takes between someone arriving on shift and being able to get into the clean room and start work,” Watt says. “We’ve also focused on resilience, with no single point of failure in the facility’s mechanical, electrical or control systems that could stop production.” 06

The company also sees an opportunity to help the NHS secure greater value from its medicines, through improved patient outcomes courtesy of high-quality compounds and greater efficiency, achieved via economies of scale and the business’s specialisation in supplying pharmacies. Watt believes the company can play a key role in providing greater capacity to NHS pharmacies.

QUALASEPT PHARMAXO IN NUMBERS SALES IN LAST 12 MONTHS

£87.9m T WO-YEAR CAGR

69% PHARMA FAST 50 R ANKING

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Sub-sector: Outsourcing

“Customer demand is only going to continue to increase and we see opportunities to do more – for example, to work more closely with hospital pharmacies through better logistics,” Watt says. If a pharmacy needs to supply medicines to wards by 9am, say, the company should be able to deliver what is required to hit that deadline, he explains. “I see us extending our reach so we can serve hospitals from a much earlier stage in

CASE STUDY

THE PHARMA FAST 50

PHARMA OUTSOURCING

Bright future for pharma outsourcers Consolidation amongst CROs and CMOs provides valuable opportunities for smaller pharma outsourcing firms

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he pressures facing big pharma are tougher than ever. Not only are their costs rising, as trials become more complex and payers demands become more rigorous, but also revenues are in decline as key drugs move out of marketing exclusivity. In this context, the growth prospects for pharma outsourcing businesses, including the nine such companies in this year’s Alantra Pharma Fast 50, are exciting; the best of these companies will secure more work as big pharma seeks to protect its profitability. This strong growth outlook has driven a wave of consolidation in the outsourcing sector, particularly amongst larger Contract Research Organisations (CROs), with a series of deals that have created a number of very large CROs, and a new category of “mega” CRO operating multi-nationally; last year’s merger between INC Research and Inventive Health is a good example. Deal-making is also on the increase amongst Contract Manufacturing Organisations (CMOs), though the sector is at an earlier stage of consolidation. For the smaller outsourcing firms in the Pharma Fast 50, this consolidation provides a valuable opportunity to serve the small and mediumsized pharma companies which the mega CROs are increasingly less well positioned to cater for. Businesses such as sub-sector leader Simbec-Orion (see opposite) and Pharma Fast 50 constituent Sequani have much to gain from providing a tailored and attentive service to these clients, who may otherwise pay high fees to a large CRO that regards them as a low priority.

“We can provide a much more holistic service than a larger CRO,” says Sarra Laycock, Director of Site Operations at Sequani, which specialises in assessing the safety to humans of a new molecule for use as a medicine or in crop protection, from where they enter the human food chain. “Small single molecule drug developers recognise the appetite of large pharma to buy up promising compounds and there’s an urgency to progress candidates as quickly as possible; we provide a reliable, costeffective service to customers that need to get it right first time but have limited funds to get to development milestones.” This is a business model many small and mid-sized CROs and CMOs will recognise; and as consolidation in the outsourcing marketplace continues, the opportunity to secure profitable growth from providing a high-quality service to smaller clients is set to grow. Both clinical research and analytical and bio-analytical testing will provide these businesses with robust returns.

LE AD PHARMA OUTSOURCING: SIMBEC-ORION Simbec-Orion, the leading business in the Pharma Fast 50 outsourcing sub-sector after overall leader Qualasept Phamaxo, describes itself as a “boutique CRO”. Formed four years ago through the merger of Simbec Research and Orion Clinical, CEO Ronald Openshaw says: “We know we can’t be all things to all men, but we can be all things to some.” The company offers a full range of CRO services to small- and mid-cap biotechs that the larger CROs struggle to cater for. “I’d rather be best-in-class for a more limited number of clients than an also-ran to everyone,” Openshaw explains. His business specialises in verticals including oncology, rare and orphan diseases, respiratory, dermatology, and infectious diseases and vaccines, but Openshaw says it is the firm’s breadth that is crucial, with services ranging from Phase 1 studies all the way through to Phase 4 post-marketing work. Openshaw expects the CRO market to continue growing at a double-digit pace, and also sees CRO consolidation providing further opportunities for Simbec-Orion to target smaller drug developers with its strong service proposition. He is also eyeing international expansion. “Our footprint in the US is not as big as it should be yet given that America represents 45% of the global drugs market.” SIMBEC-ORION IN NUMBERS SALES IN LAST 12 MONTHS



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Sub-sector: Pharma outsourcing

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PHARMACY CHAINS

Pharmacies consolidate to rise above funding pressures NHS funding challenges are prompting pharmacy chains to rethink their business models, but the long-term outlook is positive

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he demographics of the UK underpin a promising long-term outlook for pharmacy chains: as the population grows larger and gets older, demand for both preventative and curative medicines will increase. NHS figures show prescriptions rising steadily in recent years – by 3% between 2015 and 2017 alone. However, the 2017 Alantra Pharma Fast 50 includes only 12 pharmacy chains, down from 21 last year. In part, that reflects the strong growth seen in other sub-sectors, but it also points to the challenges now facing pharmacists. Most obviously, the Government’s announcement of a 4% cut in the community pharmacy budget in 2017 and 2018 is costing the sector more than £200m; the cuts are painful for businesses that typically earn 90% of their income from dispensing prescriptions. There are other pressures on pharmacy chains too; for example, one survey published last year found that more than three-quarters of pharmacies now offer a home delivery service for medicines, as customers demand retail-style convenience. Indeed, digital competition is a growing concern.

Greater scale also enables pharmacy groups to offer a broader range of services, such as health screenings and support to stop smoking, which generate additional revenue. Many are moving towards a community pharmacy model, with encouragement from the Government. The pharmacy chains in the Pharma Fast 50 prove it is possible to grow rapidly even in the current tough funding environment – all have achieved double-digit annualised revenue growth over the past two years. The Government believes automation is the key to lower costs, with ministers pushing the sector to adopt a hub-and-spoke model where prescriptions are made up at a central hub and then dispensed through spoke pharmacies. In theory, this should reduce costs while also freeing up pharmacy staff to provide more additional services to patients. There will be challenges, but get this strategy right and it can drive growth. Expect future Pharma Fast 50 pharmacy chain entrants to include hub and spoke pioneers.

The pharmacy chains in the Pharma Fast 50 prove it is possible to grow rapidly even in the current tough funding environment – all have achieved double-digit annualised revenue growth over the past two years.

The response of many pharmacy chains has been to consolidate: while the sector remains fragmented, M&A activity has increased steadily over the past five years. Chains with greater scale are investing in advertising and marketing, building brands in a way that has traditionally been the preserve of only the very largest businesses in the sector.

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PHARMACY CHAINS

THE PHARMA FAST 50

LE AD PHARMACY CHAIN: GORGEME AD Gorgemead is the fastest-growing pharmacy chain in this year’s Alantra Pharma Fast 50. Trading on the high street as the Cohens Chemist chain, the company’s acquisition strategy has seen it build a nationwide network anchored in its stronghold in the North-West of England. It continues to add new pharmacies to that network – last year alone saw it acquire seven other businesses – capitalising on divestment opportunities from the largest chains while also snapping up smaller, local pharmacy businesses. Gorgemead’s remarkable revenue growth is particularly impressive given the headwinds that are facing the pharmacy sector – most notably cuts in Government funding – but the company has sought to exploit the changing dynamics of the marketplace, adding new patient services that meet ministers’ goal of reducing the strain on the NHS while also bringing in new customers. These services are increasingly offered through Gorgemead’s community pharmacies, where it offers a range of healthcare checks and medicine usage reviews in addition to

prescriptions and additional services – flu vaccination programmes aimed at business customers, for example. Very often, its pharmacies are to be found in the increasing number of community health centre developments around the UK, though it also retains traditional high-street outlets. GORGEMEAD IN NUMBERS SALES IN LAST 12 MONTHS


51%

PHARMA FAST 50 R ANKING

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Sub-sector: Pharmacy chains

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DEVELOPMENT, WHOLESALE AND SUPPLY

Developers and suppliers take centre-stage

DWS businesses are benefitting from numerous growth drivers, but face headwinds too

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ith 21 entrants, development, wholesale and supply (DWS businesses account for more constituents of the Alantra Pharma Fast 50 than any other single sub-sector this year. In part, that reflects the diversity of this grouping, but several common themes are driving growth. Most significantly, the ongoing patent cliff continues to provide valuable opportunities for businesses focused on generics. As the NHS pursues greater cost efficiency amid a painful funding squeeze, non-branded, off-patent drugs are attractively priced and will account for a growing proportion of payer-sourced product. For generics specialists such as Pharma Fast 50 constituents Aspire Pharma and Morningside Pharma, this trend is already underpinning rapid growth; the companies have posted average annual sales growth of 46% and 33% respectively over the past two years. Elsewhere in drug development, smaller, privately-owned pharma businesses are also reaping impressive returns from growing niches. The growth in the animal health market, for example, has boosted Pharma Fast 50 constituent Norbrook, while Nova Bio-Pharma is an example of a business doing well in specials, unlicensed drugs that fulfil particular clinical needs that cannot be met by licensed products.

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buyers seek greater efficiency and flexibility from their suppliers. Smaller, more nimble players have been able to capitalise on this demand driver via smarter logistics, including a move towards digital platforms. However, DWS is also a sub-sector that faces challenges. In the distribution space, as the largest firms consolidate and seek to streamline, they can look to do the same with their suppliers and distributors, which can mean some smaller businesses are at a disadvantage unless they work to grow and expand their capabilities at the same pace. The spectre of Brexit also looms large. For drug importers, the decline in the value of the pound since the June 2016 referendum has reduced profitability. For exporters, meanwhile, uncertainties over access to European markets will persist until a Brexit settlement is reached. More fundamentally, adds Aubrey Powell, sector lead for healthcare and life sciences at the Equity Capital Markets specialists N+1 Singer, “Developers of drugs and devices do depend on highly-skilled people doing specialised jobs, so maintaining the flow of talented scientists from across Europe and the rest of the world has to remain a key objective.”

In wholesale and supply, meanwhile, businesses such as Converse Pharma are benefitting from investments in logistics, as pharmacies and NHS

Given these headwinds, next year’s Pharma Fast 50 will make for interesting reading. While many companies in this sub-sector still have exciting growth prospects, we will be following how DWS businesses respond to these challenges.

DEVELOPMENT, WHOLESALE AND SUPPLY

THE PHARMA FAST 50

LE AD DWS: IMMUNOCORE Biopharma business Immunocore, the leading company in the development, wholesale and supply sub-sector of this year’s Pharma Fast 50, is developing treatments that have the potential to transform outcomes for patients with devastating diseases. Its specialism is a new technology that is designed to stimulate patients’ own immune systems; the technology relies on the body’s immune cells, known as T-cells, and seeks to reprogram them in order to fight the disease in a way that is personal to each patient. This T-cell receptor technology has initially focused on the treatment of certain cancers, including a rare form of eye cancer, which has largely been neglected by big pharma given its relative lack of commercial appeal. Over time, however, the technology also has the potential to help patients with infectious diseases, including TB and HIV. The company’s pioneering work has attracted the attention of leading pharma firms, with a series of out-licensing deals underpinning its rapid sales growth over recent years. Its partners now include GSK, Genentech, Medimmume and Eli Lilly. Last year, Immunocore also benefited from a significant investment from the Bill & Melinda Gates Foundation, providing further valuable funding as well as increased profile.

IMMUNOCORE IN NUMBERS SALES IN LAST 12 MONTHS


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The ongoing patent cliff continues to provide valuable opportunities for businesses focused on generics.

PHARMA FAST 50 R ANKING

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Sub-sector: Development, wholesale and supply

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CONSULTING

Consultants prove pharma’s value case Big pharma is increasingly reliant on consultants to communicate the value of their drugs to a range of key stakeholders

W Patient engagement is a particularly important new service that big pharma is becoming more interested in – asking patients how a disease affects them and how they want it to be treated. RICHARD WHITE COMMERCIAL DIRECTOR, OXFORD PHARMAGENESIS

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ith margins under pressure, pharmaceutical companies are acutely conscious of the need to get new products to market as quickly and cost-effectively as possible, and to maximise returns from products in the market. This has increasingly prompted them to turn to consultants with specialist skills ranging from data and market analysis expertise to sales and marketing; such businesses account for eight constituents of this year’s Alantra Pharma Fast 50. One of those companies, Nucleus Holdings, is a good example of how the marketplace has changed: this full-service medical communications group, the largest of its kind in the Pharma Fast 50, counts the world’s top 20 big pharma companies amongst its client base, as well as a number of smaller biotechs. “There was a time when a pharma’s main approach to launching a product would be traditional advertising, but that is no longer effective,” explains chairman Stephen Cameron. “Instead, we work through very large clinical datasets to gain a detailed understanding of a new drug’s actual benefit, and then work to communicate this to the groups for which it will be most relevant.”

CONSULTING

Dr. Rakesh Verma, president of Prescient Healthcare Group, a product strategy consultancy where expert-led, evidence-based consultancy has driven strong growth, agrees. He explains that for big pharma companies, filling and progressing the drugs pipeline quickly is more important than ever, and this is driving them into areas where they haven’t previously operated. “For example, 15 years ago big pharma would not have looked at rare diseases, but numerous firms now are.” Such businesses often lack in-house experience and expertise in these new areas, driving demand for specialist consultants; this is one reason why Prescient now works with 22 out of the 25 largest global pharmaceutical firms. It combines expertise in the field with real-world evidence and data to provide advice on product strategy from molecule stage to end of life. While these pressures are increasing the value of data, analytics and commercial insights to big pharma, firms need a high quality and reliable product, points out Alexander Karle, CEO of Evaluate Group. Evaluate provides commercial intelligence for the life science industry, combining reports from over 200 analysts to create consensus views on more than 4,500 different drugs. The “secret sauce”, Karle explains, is how Evaluate is able to use this information to create reliable forecasts – it is known in the industry for its high-quality and reliable data, leading to a coveted place on the preferred supplier lists of all top 25 big pharma companies.

THE PHARMA FAST 50

It is not macro trends that have driven Evaluate’s growth, Karle adds. “We grew at the same rate during the 2010-2014 flat period for big pharma as the 2014-2017 boom period for biotech,” he explains. Rather, meeting customers’ purchasing criteria and growing a loyal customer base with a high-quality and relevant product has been the key to success. At fast-growing Lucid Group Communication, CEO Dennis O’Brien tells a similar story about the evolving role of communications in pharma. Lucid’s work is often focused on maximising a medicine’s potential through work such as education of healthcare practitioners. Its business also focuses on behavioural change, encouraging practitioners to embrace practices that drive better patient outcomes; one example is the company’s work in inflammatory bowel disease, where it has educated healthcare professionals on how to measure patients’ symptoms more effectively – and therefore to rely less on steroid treatments. “What we’re doing here is working with pharma companies and clinicians to make a real difference to patients’ lives,” O’Brien says. Indeed, the consultants’ brief is often much wider than simply communicating the strengths of a new drug to potential buyers – it may incorporate work with all the key stakeholders throughout the pharma space, from regulators to patients; for example, consultants may take responsibility for building the data necessary to ensure a new product gets approval long before it is being pitched to the market. “We see our growth coming from value demonstration in the broadest sense – that is, proving the value of a medicine from a clinical, economic and patient perspective,” says Richard White, the Commercial Director of Oxford PharmaGenesis, another consultant in this year’s Pharma Fast 50. “Patient engagement is a particularly important new service that big pharma is becoming more interested in – asking patients how a disease affects them and how they want it to be treated.”

LE AD CONSULTANT: R ANDOM42 Random42’s sales have grown more quickly than any other consulting business in the Pharma Fast 50 over the past two years, a reflection of the important role its technologies now play in the sales and marketing efforts of the world’s biggest pharma companies. Random42’s expertise lies in visual story-telling, with illustrative technologies that accurately portray the way in which pharma companies’ drugs act within the body. The company’s detailed technical understanding of the mechanisms employed by clients enables it to generate fullcolour, high-definition graphics. Its animations – and, increasingly, virtual and augmented reality material – form the basis of pitches to investors, buyers and other key stakeholders. “We work with 23 out of the world’s 25 leading pharma firms and this is a fast-growing market,” says Ben Ramsbottom, Random42’s CEO. “We think it will grow by at least 20% a year in the short to medium term.” Ramsbottom believes Random42’s visualisations have increasing appeal to cost-conscious businesses as well as offering a powerful sales tool. “Traditionally, these companies have depended on very large sales forces, but with these technologies now available across so many different platforms, we may be able to help them reduce that cost,” he explains. RANDOM42 IN NUMBERS SALES IN LAST 12 MONTHS



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Sub-sector: Consulting

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TRENDS

Pharma in 2018 and beyond Five themes set to dominate pharma over the year ahead How will the Alantra Pharma Fast 50 look in 12 months’ time? In a global marketplace where an older and larger population will demand further increases in healthcare spending, the big-picture drivers for the sector look promising. “The healthcare sector is in a really strong place right now, with tailwinds that are definitely much stronger than the headwinds,” says Steven Kent. That view is widely shared: industry forecasts predict global pharmaceutical sales will hit $1.6 trillion by 2020, up from $1.08 trillion in 2011; the UK’s share of that total is expected to be $38.6 billion. At a more granular level, however, the outlook for different sub-sectors of the pharma industry vary considerably. Inevitably, the key themes underpinning growth will play out differently for different businesses over the next 12 months and beyond, and the shape of the Pharma Fast 50 will change once again. We consider just five of those themes opposite.

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TRENDS

THE PHARMA FAST 50

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THE RISE AND RISE OF DATA

PERSONALISATION SPREADS FURTHER

NO LET UP IN REGULATION

Big data and analytics tools have the potential to transform pharma. For example, real world data collection is set to become ever more important, to the benefit of the UK, which currently hosts the highest number of pharmacoepidemiology studies to monitor and improve the use of medicine on a population-wide basis across Europe – though the impact of Brexit is uncertain here.

Many companies already incorporate hyperpersonalised experiences in their marketing, and as personalised medicine continues to take hold, consumers will expect the same approach with healthcare communication.

Don’t expect regulatory pressures to ease. Firms big and small are gearing up for further regulatory change, including reforms to processes for securing consent, the introduction of the General Data Protection Regulation in May 2018, the impending deadline for implementing serialisation regulation, and the implementation of the Clinical Trial Regulation in 2019. Keep an eye out for new entrants to the Pharma Fast 50 from businesses that have positioned themselves to benefit from new outsourcing and consulting opportunities coming out of this.

Look out too for the increased use of regulation information management technologies and a further shift towards risk-based monitoring and data-driven decision-making. Already, quality systems are moving on to the cloud, with regulators pushing for enhanced processes and policies. Regulatory submissions will increasingly be expected to include more data. Both big pharma and biotechs, meanwhile, will work hard to turn data points into human stories and the patient voice will become even more important in explaining the life-changing benefits of a treatment. In 2017, we witnessed the power of patient testimonials in driving the approval of the Spark gene therapy treatment for a form of childhood blindness. There will be many more examples. Equally, as the pharma sales process changes, advanced analytics assessed via specialist consultants such as Prescient Healthcare Group offer a compelling new narrative for the industry’s sales teams and key decision makers.

Indeed, personalisation is on the march. Last year saw breakthroughs in advanced genetic therapies such as viral mediated gene transfer and CAR-T therapies; these are likely to carry on into 2018, though they raise difficult questions around reimbursement and patient access. Similarly, there will be a continued focus on the rare side of common diseases, with an increased focus on specific mutations or subtypes within larger or more common tumour types. The UK is especially well-placed to see growth in specialist fields such as gene therapy, thanks to its high-quality academic institutes, the presence of strong bio-pharma clusters, and its attractiveness to leading scientists and researchers. This also increases the need for specialist communications businesses such as Lucid Group and Oxford PharmaGenesis to help analyse and communicate the benefit of these treatments.

4 GLOBALISATION CONTINUES (DESPITE BREXIT) The world is getting smaller: 2018 is likely to see continuing global regulatory harmonisation – the US will move closer to the EEA, for example, while the EEA moves toward Japan. The outlook in Asia is changing too. China continues to relax its boundaries with other territories and with the Asia Pacific CRO market being expected to grow at 20% a year over the next five years compared to 10% in North America, we can expect strong interest there from American and European businesses.

5 OUTSOURCING MATURES As life sciences firms continue to streamline drug development workflows, outsourcing will continue at pace. This will drive further CRO and CMO consolidation, creating opportunities for smaller players to service small and mid-sized clients that are no longer attractive to the big players – and to develop new specialisms, such as pre-clinical CRO work. The top CROs will have to innovate, with the ten largest groups now representing more than half the market; in 2018 these businesses will focus on modernising their technical and data environments to offer a differentiated proposition.

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THE FAST 50

The fastest growing pharma companies PHARMA FA ST 50 ME THODOLOGY The Alantra 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. QUALIFIC ATION CRITERIA AND RESE ARCH APPROACH 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 £4 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 2016. 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, will not qualify for inclusion.

KE Y 00. Rank % 2-year CAGR C Company R

Revenue (£m)

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Pharma outsourcing

Pharmacy chain

Development, wholesale and supply

Consulting - other

Sub-sector winners

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69%

2.

61%

Qualasept Pharmaxo Holdings R £87.9m Makes ready-to-use injectable medicines

Immunocore

R £16.5m A group engaged in research and development of engineered receptors

3.

51% Gorgemead R £168.2m A group engaged in retail pharmacy and pharmaceutical wholesale

4.

49%

6.

47%

Simbec-Orion Group

Converse Pharma

R £23.5m Clinical research provider

R £187m A group engaged in the wholesale supply of pharmaceuticals

5.

48%

PCT Healthcare R £143.9m A group engaged in retail pharmacy and pharmaceutical wholesale

9.

45%

7.

46%

Clintec International R £12.3m The provision of clinical research for the pharmaceutical and biotech industry

Aspire Pharma

R £21.5m Registration, marketing and distribution of branded and generic pharmaceutical products

8.

46% Phlexglobal

R £24.5m Electronic trial master file systems and services

10.

43%

BR Pharma International R £20.5m Wholesale of pharmaceutical goods

The Fast 50 11

38%

C Laxmi BNS Holdings R £286.4m A Wholesale of pharmaceutical goods

34%

C Worthing Pharmacies R £8.4m A Pharmacy

34%

C Random42 R £7.5m A Scientific animations provider

33%

C Morningside Pharmaceuticals R £55.3m A Supplies licensed pharmaceuticals to the NHS, retail pharmacies and aid agencies

32%

C 3VS UK R £84.1m A Develops and sources pharmaceutical products into the UK for the domestic market and for export

31%

C Durbin Group PLC R £70.6m A Distributes pharmaceuticals, medical equipment and medical supplies

30%

C Jhoots Healthcare R £11.3m A Pharmacy

30%

C Lucid Group Communications R £13.4m A Provider of strategic medical communications

26%

C LGC Science Group R £328.4m A Life science measurement and testing

23%

C Concept Life Sciences R £41.2m A Integrated drug discovery services

12

13

14

15

16

17

18

19

20

18

21

23%

C ITH Pharma R £30.8m A Aseptic compounding for all therapy areas

22%

C Munro Healthcare Group R £120.6m A Wholesale of pharmaceutical goods

22%

C Beta Pharmaceuticals R £26.2m A Wholesale of pharmaceutical goods

22%

C Mediwin R £56.5m A Wholesale of pharmaceutical goods

21%

C Prescient Healthcare Group R £12.7m A Product strategy consultant

20%

C DAY Lewis PLC R £382.3m A Pharmacy

20%

C Sygil Group R £12.3m A Integrated drug discovery services

20%

C Pharmacy Care Plus R £12.7m A Pharmacy

20%

C Wigmore Medical R £37.8m A Wholesale of pharmaceutical goods

19%

C Oxford Pharmagenesis R £17.6m A HealthScience communications consultancy

22

23

24

25

26

27

THE FAST 50

28

29

30

THE PHARMA FAST 50

KEY

00 Rank

Pharma outsourcing

% 2-year CAGR

Pharmacy chain

C Company

Development, wholesale and supply

R

Consulting - other

Sub-sector winners

Revenue (£m)

A Activity

31

19%

C Clementine Associates R £33.3m A Pharmacy and distribution

18%

C Evaluate Group R £19.9m A Commercial intelligence for the life science industry

18%

C Nucleus Holdings R £75.6m A Provider of strategic medical communications

17%

C Crawford Healthcare Holdings PLC R £25.2m A Supplier of dermatology and woundcare products

17%

C Nova Bio-Pharma R £21m A Supplies specials and clinical trial medicines

17%

C RSR R £27.6m A Developer and producer of in vitro diagnostic kits with an emphasis on autoimmunity

16%

C Lexon (UK) R £201.3m A Pharmaceutical distributor and retailer

16%

C Strandhaven R £11.4m A Pharmacy

14%

C M & D Green Dispensing Chemist R £11.2m A Pharmacy

14%

C Quotient Clinical R £41.1m A Early stage and specialist drug development

32

33

34

35

36

37

38

39

40

41

14%

C Knight Noise R £16m A Pharmacy

13%

C Pharmadent R £38.8m A Procurement, storage and distribution of pharmaceutical and healthcare products

12%

C Clarity Pharma R £44.7m A Pharmaceutical consultancy

11%

C Laville R £19.5m A Pharmacy

10%

C Three Pears R £13.3m A Wholesale of pharmaceutical goods

10%

C Badham Pharmacy R £14.9m A Pharmacy

10%

C Sequani R £12.7m A Scientific services in the toxicology field to the pharmaceutical (>80%) and crop protection industries

10%

C G.R. Lane R £31.8m A Manufacture and distribution of nutritional supplements and pharmaceutical products

10%

C Knights Chemist R £15.7m A Online pharmacy

10%

C Norbrook R £238.7m A Manufacture and sale of human and veterinary pharmaceutical product

42

43

44

45

46

47

48

49

50

19

Healthcare sector At Alantra we focus our activity in the Healthcare sector on the following key areas – Healthcare Services, Pharmaceuticals (products and services) and Medtech (devices and supplies).

ALANTRA Alantra is a global investment banking and asset management firm focusing on the mid-market with offices across Europe, the US, Asia and Latin America.

Examples of our Healthcare deals FULL ADVISORY SERVICE

PHARMACEUTICALS

SALE TO

Alantra advises business owners, management teams and financial investors on: SALE TO

SALE TO

• M&A transactions • Private equity • Equity capital markets • Debt capital markets

SALE TO

ACQUIRED

ACQUIRED

GLOBAL REACH Our team of 300 corporate finance professionals are present in over 20 countries:

HEALTHCARE SERVICES

• Advised on over 700 deals worth more than €100bn • Over 50% of our deals are cross-border

MBO

RECAPITALISATION OF

MBO

• Quoted partnership with over 100 partners leading deals SECTOR EXPERTISE Deep coverage of chosen niches:

SALE TO

SALE TO

ACQUISITION OF

• Over 250 business sold to strategic trade acquirers • Cross-border relationships with strategic acquirers and capital providers

MEDTECH

CONTACT US

MBO

MBO

MBO

If you would like to discuss the Alantra Pharma Fast 50, find out more about our work in the Healthcare sector or how we can help you achieve your objectives, please contact us: Justin Crowther [email protected]

SALE TO

SALE TO

SMBO

Tom Cowap [email protected] +44 (0) 20 7246 0500

THE GLOBAL MID -M ARKE T SP ECIALIST

Austria & CEE Belgium China France Germany

Greece India Ireland Italy Latin America

Netherlands Nordics Portugal Spain Switzerland

Turkey United Kingdom United States

Alantra 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. Alantra Corporate Finance LLP is authorised and regulated by the Financial Conduct Authority (number 478406) © Alantra Corporate Finance LLP 2018

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