A rapidly changing healthcare environment and an increasingly challenging competitive landscape are making it difficult for life sciences companies to continue to grow and drive value for their shareholders. In particular, longer, more expensive and riskier investment timelines with narrower populations, pricing pressure, shortened exclusivity and more competition are compressing the ROI and the available profit pools.
Contract services companies that can help life sciences companies win, and win efficiently, can create and capture significant value for themselves. Specifically, driving R&D productivity, optimizing patient access and uptake, reducing the cost bases, and ensuring compliance are key drivers of success in contract services.
At L.E.K., we help contract services clients help their life sciences customers advance new therapies, increase ROI and win in a challenging, global healthcare market.
How we help
Pharmaceutical contract services companies routinely engage us to:
- Evolve their scaling business models: As individual solutions scale and mature, they need to evolve from bespoke services to standardized offerings and products to technology-enabled enterprise solutions. These transformations require critical strategic choices and an evolution of not just capacity but also capability. Critical decisions around priority customers and priority offerings compete for attention. Finding the optimal business mix and focus is critical for sustained growth and defensible advantage.
- Expand their service offerings: We help our clients expand their capabilities into high-value growth areas that enable their own customers to compete: new customer segments, adjacent services, and even portfolios of products, platforms and services.
- Develop integrated offerings and new value propositions: Many pharmaceutical clients are seeking more streamlined and integrated capabilities from their partners. In addition, the opportunity to “do it in a better way” or “disrupt business as usual” becomes possible with advances in technology and the integration of services. We help develop and validate new approaches to old tasks while developing the business cases and development plans required for success.
- Execute value-creating deals: Whether seeking growth capital, new capabilities, exploratory ideas or entrenched customer bases, deals are an essential part of pharmaceutical contract services. We help companies get the most out of their transactions on both the buy and sell sides.
The subsectors we have significant experience in include:
- Contract research organizations (CROs): Discovery, preclinical, early clinical and clinical CROs, as well as R&D enabling functions including eClinical, software, site management, clinical services and patient recruitment.
- Contract development and manufacturing organizations (CDMOs): API, finished dose form and packaging for small molecules and biologics, controlled substances, specialized manufacturing, and development/formulation services.
- Distribution supply chain: Wholesale distribution, specialty pharmacy, supply chain management and site-of-care services.
- Regulatory, medical affairs and compliance: Medical writing, publication planning and management, regulatory submissions, pharmacovigilance, and other compliance services.
- Commercial and market access: Contract sales, marketing and digital services; outsourced MSLs, HEOR and managed markets; patient and hub services; adherence and case management; etc.
Examples of our work
We have helped companies across several contract services subsegments recalibrate their product strategy or business model to drive profitable growth and outsize returns.
- Scaling a growing business: A midsize contract manufacturer was struggling to define a compelling value proposition and determine which parts of the business to invest in for growth. L.E.K. analyzed the business and key adjacencies, developing a focused growth strategy to create defensible advantage and sustainable value accretion for its shareholders. As a result of this strategy, our client doubled its revenue, realized tens of millions of dollars in incremental cash flow and increased company value by more than three times in under two years.
- Supporting transformative M&A: A large global CRO was looking to acquire and integrate several different companies to enhance its solution portfolio; however, identifying the right companies and executing on their integration seemed to be a daunting task. With L.E.K.’s support, the client screened and conducted due diligence of several targets, executed on multiple transactions, and developed detailed integration plans for pre-close and 100 days post-close. The result has been spectacular, with company share price more than tripling in the five years since the project.
- Developing an integrated offering: A leading provider of drug compounding services was evaluating expansion into several adjacent product areas and channels to fuel growth. L.E.K. analyzed several market opportunities and provided the management team with a robust fact base to support investment. We then built a plan to secure partners and enter a few prioritized segments, which has helped the company double its value in less than two years.