The biopharma industry is going through disruptive times. Although private equity (PE) funding and deal activity in biotech surged in the years leading up to the COVID-19 pandemic, and peaked in 2021 amid the unprecedented speed and innovation of the vaccine development process, both started receding once the pandemic ended.The impact of this volatility has been felt throughout the pharma value chain, including by service providers that play an integral part in the development of innovative products. According to our research, PE deal activity in pharma services dropped 15 percent per annum between 2021 and 2023, largely because of the higher cost of capital and limited availability of attractive assets.In such a scenario, PE investors evaluating an investment in pharma supply chain services are likely to encounter biotech financing challenges and destocking issues within the production value chain, among other near-term concerns. But here’s the good news: The segment’s long-term investment opportunity remains promising. Our analysis has revealed that global pharma supply chain services represent a $77 billion profit pool, with several growth pockets across the value chain and modalities, including large-molecule drug substance manufacturing and finished dosage formulation for injectables.In this article, we will explore three notable investment themes: innovative large modalities and drug classes (such as antibody-drug conjugates [ADCs] as a novel treatment class for cancer); high-growth subsegments for inputs and niche services (including sterile fill finish); and specialized drug delivery device components (for example, the value chain for glucagon-like peptide-1 [GLP-1] therapies for the treatment of type 2 diabetes and obesity).In recent years, the rapid advancement of science and drug delivery technology has increased the complexity of launching a product, resulting in growing demands on biopharma supply chain players. With support from PE firms, biopharma companies can expand their capabilities and offer broader solutions to their customers, addressing a significant unmet need.A period of peaks and troughsPharma supply chain services, an understudied segment of the pharma industry, include diverse businesses with distinct business models. The segment spans raw materials and inputs providers; biopharma contract development and manufacturing organizations (CDMOs); drug delivery and containment players; as well as packaging, storage, and distribution companies.Given its criticality to the pharma industry, this industry segment has historically proved to be a resilient investment for PE and public-market investors. By investing in pharma services, investors avoid taking any specific asset risks associated with the clinical or commercial success of individual drugs. Moreover, the segment’s growth trajectory has also typically mirrored that of the broader biopharma industry. Over the past decade, for example, a surge in innovation—most n
Gio. Gen 30th, 2025
