Over the past three years, the average deal size in the Healthcare & Life Sciences sector has increased. The epidemic has exposed gaps in global healthcare capacity and drawn investments in this field. The demand curve for healthcare industry verticals is predicted to be permanently shifted by the dramatic rise in the demand for top-notch medical services, equipment, and products worldwide. Additionally, M&A activity in the healthcare sector is anticipated to continue to be strong as investors’ appetite for risk increases in a low yield environment. BB Capital, the top private market M&A advisory firm in Saudi Arabia, is aware that selling a company is a significant choice. A committed business owner aims to sell their company to a qualified buyer who can carry on the company’s legacy in addition to maximizing the amount of money they can get from the sale.

Understanding certain crucial elements unique to the healthcare and life sciences industry that could affect the possibility of a possible sale is crucial for entrepreneurs and business owners considering a possible sale. These elements influence how appealing a company is to possible investors and buyers.

Investing in research and product development is the most significant cost for businesses creating goods in the healthcare and life sciences sectors. Clinical trials, focus group research studies, and other experiments may be part of this procedure. It frequently takes years and a significant financial outlay in the form of sunk expenses to develop a profitable product, with no assurance of future sales. As a result, businesses in this sector are viewed as extremely dangerous. Investors with complementary product portfolios are drawn to companies having a history of successfully launching items onto the market or conducting successful clinical studies.

Regulation: Manufacturers in this sector are subject to stringent regulations and must go through costly and time-consuming regulatory approval procedures. Therefore, a successful completion of this process can provide an exclusive market for industry participants who pose little threat from competition. Businesses with exclusive patents and other forms of intellectual property are in great demand and can command a high price.

Exclusive Contracts: Businesses that provide highly specialized goods and services frequently depend on suppliers that are exclusive source and have control over the distribution of particular raw materials needed for production. Manufacturers can increase entry barriers and expand a healthcare company’s economic moat by controlling the supply chain and establishing exclusive agreements. Exclusive agreements with specialist suppliers provide distributors with protection against rivalry.

Marketing & Brand Awareness: Marketing expenses are one of the biggest sources of costs for healthcare and life sciences organizations. Players in this market must make significant investments in educating consumers about their products and raising brand awareness among the general public in addition to spending money on R&D and regulatory approvals. A company’s attractiveness increases with the size of the addressable market for its product line.

Whether it’s a sale or a valuation, our team can offer resources and experience that are only available at larger companies, together with the individualized attention of our M&A Advisory team. Reach out to one of our advisors by contacting us right now.