A pharmaceutical testing lab, an analytical testing laboratory working for drug makers or a medical device testing lab takes years to build: GMP inspections passed, methods validated and client audits cleared one after another. When the time comes to sell, what that record fetches depends on how many credible buyers compete for the laboratory, and 78 different buyers have acquired pharmaceutical and medical device testing laboratories since 2015. What follows is the deal record for these laboratories, the strengths a buyer credits and the groups that have been acquiring them.
The laboratories in this segment test medicines and devices for the companies that make them. On the pharmaceutical side that means analytical chemistry, microbiology, stability and bioanalytical testing for pharmaceutical and biopharmaceutical manufacturers; on the device side it means biocompatibility, sterility, packaging and performance testing for medical device makers. Of the 171 deals we count, 127 were pharmaceutical and biopharmaceutical testing laboratories, 38 medical device testing laboratories and 6 other health testing laboratories, such as disinfectant efficacy testing and quality assessment schemes for clinical laboratories. The work recurs because regulation ties it to production: each batch of a medicine is tested against its specification before release, stability studies run through the shelf life claimed for a product, and device makers need new test data whenever they change a material, a supplier or a sterilization process.
In short, the six deals in the segment with an EBITDA multiple have a median of about 9.2x EBITDA, and the 12 with a revenue multiple a median of about 2.5x revenue. That is a little below the 10.1x EBITDA for all testing laboratories and a little above their 2.4x revenue. Against all TIC deals on our pages, at 9.9x EBITDA and 1.8x revenue, the segment is lower on EBITDA and higher on revenue. Across all testing laboratories, the deals with an EBITDA multiple had a median deal size of about $60M.
Pharmaceutical and Medical Device Testing Laboratory Deal Multiples Compared With the Wider TIC Market
Of the 171 pharmaceutical and medical device testing deals in our database since 2015, 19 disclose a deal value. With company filings and acquirer announcements added, we could calculate an EV/EBITDA multiple for 6 of them and an EV/Revenue multiple for 12. Treat the segment figures as indicative: one more deal could shift either median. A smaller laboratory should expect a multiple below these medians unless several buyers compete for it and it can show a clean GMP inspection record and long-standing clients.
| Pharmaceutical and medical device testing laboratories | All testing laboratories | All TIC (our three hubs) | |
|---|---|---|---|
| Median EV/EBITDA | 9.2x (6 deals) | 10.1x (24 deals) | 9.9x (54 deals) |
| Median EV/Revenue | 2.5x (12 deals) | 2.4x (72 deals) | 1.8x (142 deals) |
| Median deal size (EV where disclosed, otherwise the disclosed deal value) | $13.2M (19 deals) | $13.4M (128 deals) | $13.4M (282 deals) |
We track every pharmaceutical and medical device testing laboratory acquisition since 2015, 171 deals by 78 different buyers, so we know which buyers fit a laboratory like yours and what they have paid.
What is your laboratory worth?
Send us three numbers: revenue, EBITDA and revenue growth rate. Within two working days we show you in confidence how your laboratory measures up against 171 pharmaceutical and medical device testing laboratory deals, which buyer groups have acquired laboratories like yours, and how any offer you hold compares with what they paid where terms are published.
Request your valuation assessment or email the numbers to marcin.majewski@aventis-advisors.com.
What Drives a Pharmaceutical or Medical Device Testing Laboratory Valuation
A buyer’s due diligence on a pharmaceutical or medical device testing laboratory works through the points below, and the answers decide where in the range the price lands.
GMP, GLP and ISO/IEC 17025 standing
A laboratory that tests medicines for release works under GMP: the FDA, the MHRA or an EU national authority can inspect it, and each client’s quality team audits it as well. Bioanalytical laboratories that measure drug levels in samples from nonclinical safety studies work under GLP, as do most biocompatibility studies submitted for device approvals. Device testing laboratories are normally accredited to ISO/IEC 17025 for the methods they run. The first thing a buyer reads is the inspection file: when the laboratory was last inspected and with what result, any FDA Form 483 observations or warning letters, and the evidence that each finding was closed. Show this: a five-year log of regulatory inspections and client audits, with the findings and close-out dates.
Client tenure and the cost of switching
Drug makers move testing work reluctantly. A validated method has to be transferred and verified at the new laboratory, and where a testing site is named in a marketing authorization, a change usually needs a regulatory filing. Long client relationships are worth a great deal to a buyer for that reason, and the buyer will also check how much revenue depends on one client, one product or one development program. Show this: three years of revenue by client, with the start date of each relationship and the products tested.
Method scope
Buyers look at which tests the laboratory can run and how many other laboratories could run them. In pharmaceutical testing the scope covers release and stability testing, microbiology such as sterility, endotoxin and bioburden testing, extractables and leachables, impurity testing including nitrosamines, and bioanalytical and cell-based methods for biologic drugs. In device testing it covers biocompatibility under the ISO 10993 series, testing for the validation of ethylene oxide and radiation sterilization under ISO 11135 and ISO 11137, and package integrity under ISO 11607. Specialist methods that are hard for clients to move support a higher multiple than routine chemistry offered by many laboratories.
Stability programs and laboratory capacity
Stability work is booked years ahead. Under the ICH stability guidelines, a product on long-term study is tested at set intervals through its proposed shelf life, which is often two to five years, so a stability laboratory carries a contracted backlog that a buyer can count. Capacity matters as much: a laboratory running close to full shows demand, but it needs space, chambers and qualified instruments to grow. Show this: stability chamber occupancy and a schedule of studies in progress with their end dates.
Rules that add testing
Several regulations have brought these laboratories more work. Since 2019 the European Medicines Agency, and since 2020 the FDA, have required manufacturers to assess their medicines for nitrosamine impurities and to test them where a risk is found. The EU Medical Device Regulation sets deadlines at the end of 2027 or 2028, depending on risk class, for devices still certified under the old EU directives to be recertified, and manufacturers preparing for them have come back to laboratories for updated data. Buyers value revenue tied to batch release and to rules like these above one-off project work.
Scientists and quality staff
Buyers count the people who sign off results: laboratory managers, analytical chemists, microbiologists and, above all, the head of quality. If the founder still approves results or holds the main client relationships, the buyer sees key-person risk and either prices it in or asks the founder to stay for a period. Expect an early request for three years of senior scientist turnover.
Size and client mix
Smaller laboratories usually go as add-ons to groups that already serve the same clients, and those buyers pay a smaller multiple to cover the cost of folding the site in and the risk of a handful of large clients. The client base matters too: large pharmaceutical companies, biotech companies whose spending follows their funding, generic manufacturers and device makers buy on different terms and budgets, and a laboratory that serves several of these groups carries less risk for a buyer than one tied to a single kind of client.
How we present these to buyers. A buyer pays for what it can see and check. Part of our work in a sale is to present the business as strongly as the facts allow: we set out the GMP, GLP and ISO/IEC 17025 record, show how long clients have stayed and what switching would cost them, and document the method scope and stability programs, and we deal with weak points before a buyer finds them and uses them to lower the offer. A valuation assessment is the place to start, a year or two before a sale.
Who Is Buying Pharmaceutical and Medical Device Testing Laboratories
We count 171 acquisitions of pharmaceutical and medical device testing laboratories since January 2015, by 78 different buyers. Private equity firms and their platforms made 53% of them, and their share rose from 41% of the 73 deals in 2015 to 2020 to 62% of the 98 deals since 2021. The targets were in 26 countries: 68 in North America, 54 in continental Europe (12 countries), 24 in the UK and Ireland, 12 in Asia-Pacific, 6 in Latin America, 5 in Australia and 2 in the Middle East and Africa.
Tentamus Group and Eurofins Scientific together account for 37 of the 171 deals. Tentamus Group is a private equity-backed laboratory group whose pharmaceutical and device purchases sit next to its food testing laboratories.
| Buyer | Headquarters | Ownership | Pharmaceutical and medical device testing deals | Other TIC deals | Total TIC deals |
|---|---|---|---|---|---|
 Tentamus Group | Germany | PE-backed (BC Partners since 2021) | 19 | 50 | 69 |
 Eurofins Scientific | Luxembourg | Listed | 18 | 224 | 242 |
 SGS | Switzerland | Listed | 7 | 110 | 117 |
 Element Materials Technology | UK | Owned by Temasek since 2022 (Bridgepoint before) | 7 | 34 | 41 |
 Normec | Netherlands | PE-backed (Astorg since 2020) | 4 | 58 | 62 |
For an owner, the table points to two kinds of buyer. Eurofins and SGS have each bought dozens of laboratories across many kinds of testing, and they look at your business as one more site, method or country in a large network. Tentamus, Element and Normec are groups owned by financial investors that have added pharmaceutical and device laboratories as add-ons, and they will weigh how your laboratory fits the group they are building. The two kinds of owner value different things and expect a different role from you after completion; see strategic vs financial buyers.
One buyer’s offer tells you what that buyer would like to pay. Offers from several buyers, made at the same time on the same information, tell you what the business is worth. That is what a sale process does, and it is the work we do for owners: talk to us before you reply to an approach.
Selling a Pharmaceutical or Medical Device Testing Laboratory: What a Run Process Changes
An approach usually comes on the buyer’s timetable, on the buyer’s terms and as the only offer on the table, so an owner who answers it alone is negotiating with one party. A competitive sale process changes that in four ways, and running it is what we do for owners.
Several buyers bid at the same time. Private equity firms and their platforms made 62% of the 98 deals since 2021, and 78 different buyers have acquired these laboratories since 2015. A listed TIC group and a private equity-backed laboratory group can put very different values on the same method scope and stability backlog, and offers made in the same week, on the same information, show what the market will pay.
The process sets the terms of engagement. The seller sets the timetable, the information each buyer sees and the date offers are due, so competition between buyers sets the value.
Every term is negotiated while alternatives exist. The cash paid at closing, any earn-out and the figure it is measured on, your role after the sale, how a delayed client program or a slow method transfer is treated, and the terms for your head of quality and senior scientists all move most while a second buyer is still in the process.
The business is ready before the first call. Your inspection and client audit history with close-out records, the scopes of your GMP, GLP and ISO/IEC 17025 approvals, three years of revenue by client and test type, stability chamber occupancy, instrument utilization, and client contracts and quality agreements with their change-of-control clauses. We prepare all of it with you before any buyer is contacted.
Why Laboratory Owners Work With Us
We advise owners on sales with typical enterprise values between $5M and $100M, as partners of the Globalscope network. We also advise serial acquirers, which is how we know the way their offers are built and where they leave room.
Recent transactions:
- Advice to Apave on its acquisitions of ISOCERT and De Duurzame Adviseurs.
- Sale of CKSource, the rich-text editor developer, to PSG via Tiugo Technologies, after a global process that drew several letters of intent.
- Advice to Visma on its acquisition of SaldeoSMART.
“We were impressed with Marcin’s negotiating skills and Aventis’ ability to make things happen.”
Sindre Talleraas Holen, M&A Director, Visma
“Aventis Advisors did the heavy lifting so that our management team could stay focused on our business.”
Wiktor Walc, President, CKSource
Before you reply to a buyer
Send us three numbers: revenue, EBITDA and revenue growth rate. Within two working days we show you in confidence how your laboratory measures up against 171 pharmaceutical and medical device testing laboratory deals, which buyer groups have acquired laboratories like yours, and how any offer you hold compares with what they paid where terms are published.
Talk to Us
Has a laboratory group or an investor-backed platform asked about buying your pharmaceutical, analytical or medical device testing laboratory? Call us before you reply, name a price or sign a letter of intent. We run competitive sale processes for owners: we prepare the business, approach the TIC groups and private equity-backed laboratory groups most likely to pay for your inspection record, client base, method scope and stability backlog, bring their offers to a single deadline and negotiate through to closing. Aventis Advisors is a boutique M&A firm advising on transactions with typical enterprise values between $5M and $100M. Write to us at marcin.majewski@aventis-advisors.com. The first conversation is confidential. For more on how we work, see our M&A advisory for TIC companies.
Methodology
The figures cover majority acquisitions of companies whose main business is testing medicines, biologics or medical devices in their own laboratories, worldwide, since January 2015. Laboratories that test disinfectants or run quality assessment schemes for clinical laboratories are counted. Cleanroom certification and validation firms, contract research organizations running clinical or preclinical studies, diagnostic laboratories and workplace drug testing programs are excluded.
The deals come from the Aventis Advisors TIC deal database, which combines Mergermarket with acquirer announcements and our own research. EV/EBITDA and EV/Revenue use enterprise value (EV), which is equity value plus net debt; EBITDA is earnings before interest, tax, depreciation and amortization. Median deal size uses EV where disclosed, otherwise the disclosed deal value, which is the consideration for the stake acquired; stakes of 51% to 99% count only where an EV is stated. Distressed sales, and multiples outside 1x to 60x EBITDA or 0.05x to 20x revenue, are excluded from the multiples. Most private deals close at undisclosed values, so the deals with a published figure are a small sample. A median from as few as two deals is shown only where it falls inside the interquartile range of the next wider group, such as all testing laboratories; otherwise the page points to that group. Ranges need at least ten deals. EV/EBITDA is shown where the multiple or the EBITDA was published by the buyer, the seller, filings or a reputable data source; EBITDA derived from a stated margin is excluded. Each deal is counted under the buyer’s group at the time of the deal, and private equity buyers are private equity firms and the companies they owned then. All TIC combines the inspection, testing laboratory and certification deals on our pages, 2,841 since 2015.
