Given that the purchase of drugs and treatments is often a necessity purchase, discretionary spending is hard to reduce, and the size of pharmaceutical marketing budgets is large, why healthcare marketing is always at the top of investors' wish lists. It becomes clear what is there.
Historically, medical communications has tended to be the purview of network advertising groups, all of which have their own medical subsets that include various specialty organizations (including Omnicom Health Group, Publicis Health, Havas Health, and You, a list continues). Given the attractiveness of this sector, it's no surprise that an increasing number of PE firms are entering the fray.
Some of these are life sciences commercialization companies with massive $500 million in revenue, such as Everana (backed by JLL/Water Street) and Blackstone-backed Precision Medical Group, but more marketing-focused There are also groups of varying sizes, many of which are just businesses. as something important.
For example, consider Avalere Health, formerly known as Fishawack. After an LDC-backed MBO in 2017, the company made several strategic acquisitions before reaching a tipping point in 2020, when larger investments were required. It started life as Bridgepoint and has since undergone a major transformation, acquiring 19 agencies and consultancies around the world and employing more than 1,500 staff.
OpenHealth began in 2011 as a joint venture between Chime and its founders. Management expanded the business through acquisitions before selling it to Amulet Capital in 2018. After further expansion, Amulet was sold to Astorg in 2022. The company currently has sales of approximately $250 million and a staff of over 1,400.
Real Chemistry is a leading company in the healthcare unified communications space, and with support from New Mountain since 2019, it has further invested in AI and data analytics capabilities to enhance its service offering. The company currently has 2,000 employees and $600 million in revenue, another example of how a strategy backed by the right investment can achieve real scale. You can see the trend here.
Then there are the more mid-market players, including the Knox Lane-backed group Spectrum Sciences and Fingerpaints, Waterland's Siris and Levine's Prime Global. These companies have traditionally focused on investing in agencies that bring in profits of at least £2m, but some start-up entrepreneurs are happy to take on smaller opportunities where their skills match what they are trying to build. Masu.
There is no one-size-fits-all approach when it comes to healthcare agency sales. Having said that, unless it's a niche product or a market we haven't yet entered, the majority of acquirers will seek at least £1m of his EBITDA (preferably at least double) to significantly change the size of their company. I am. cover.
So, what is the market like now? In 2023, the number of major deals will decline due in part to rising debt financing costs, with many pharmaceutical companies restraining spending, which has affected some distributors' revenues and profits. Diminished. However, it was still a busy year, with 28 notable healthcare marketing deals completed.
Although 2024 has gotten off to a strong start, it will still be primarily PE-backed acquirers who will continue to lead the way. Eight of the nine marketing-specific transactions since January have involved PE and are a blend of healthcare communications, digital healthcare, market access, and payer advisory. In a sense, perhaps we should stop calling these groups “PE.” The reality is that they are now buyers of large deals in their own right, sitting at the acquisition table next to publicly traded companies. Where the money came from became a little less important.
At Green Square, we have found that digital health is a particularly active and popular area, with increasing focus on AI applications. This includes growing interest in teletherapy platforms and mental health apps, which are attracting significant investment. AI-powered health technology is one of the hottest topics right now, and acquirers can gain a competitive edge by incorporating these technologies into their existing marketing products, delivering better insights and faster delivery to customers. We aim to deliver results.
Overall, M&A activity in healthcare marketing will remain very dynamic, with agencies especially those with specialization in data and technology or at scale likely being the most popular. With buyer appetite showing no signs of slowing down and with capital gains tax changes on the horizon for UK-based buyers, now is a good time for independent agents to consider entering the market. It has become.
