The Convergence of Pharmacy and Pharma Services: Hub Services Show Opportunity

Across the pharma value chain, increasing complexity is creating many opportunities for companies to provide value-added services to key constituents. This is driving strong investor interest throughout the landscape.

“We’re seeing a convergence of pharmacy and pharma services as providers seek ways to strengthen their relationships with patients, providers, payers, and pharma by solving more challenges for their clients,” says Cheairs Porter, a managing director in our Healthcare & Life Sciences Group. “Models like hub services illustrate this theme in action.”

Below, we share why hub services are capturing investor attention and how our recent clients, Mercalis and AnovoRx, demonstrate the opportunity.

Higher Complexity, Greater Potential

Several factors are creating complexity for pharma manufacturers, including an increase in chronic and rare diseases that often require multiple targeted medications. As a result, specialty drug approvals are on the rise, which come with their own set of obstacles—from more unique packaging and distribution to more difficult patient administration and monitoring. At the same time, a site-of-care shift from hospitals to outpatient and home settings is underway to drive greater care quality, convenience, and cost-effectiveness.

These complications are creating exciting growth opportunities for a diverse group of companies within the pharma ecosystem. “Pharma manufacturers have wide-ranging pain points related to drug distribution and patient adherence for expensive specialty therapies,” says Dan Linsalata, a managing director. “Businesses that can solve more of these problems through value-added capabilities are highly sought after by customers and investors alike.”

Models particularly well positioned for success include hub services, which help manufacturers get closer to the patient, control the commercialization of their products, and ensure proper administration of complex drugs. In addition, leading hub services providers are leveraging innovative technology and deeper patient data to deliver more personalized care, improve adherence, and generate better outcomes.

A continuum also exists across the specialty drug landscape, including medications covered under the medical benefit as well as those covered under the pharmacy benefit. “As this continuum shifts toward more drugs being formulated for self-administration underneath the pharmacy benefit, hub services providers will become even more critical partners to pharmaceutical manufacturers as they commercialize their products,” says Tyler Bradshaw, a managing director.

“These companies can bring value to manufacturers by building integrated patient support hubs, creating excusive pharmacy networks, establishing direct-to-patient models, and investing in data analytics, among other strategies,” adds Porter. “Such businesses also offer many appealing investment traits, such as strong, lasting relationships with both patients and manufacturers, predictable, recurring revenue through subscription fee models, and highly scalable centralized infrastructure.”

Embodying this potential are two recent clients, Mercalis and AnovoRx, which are poised to continue capitalizing on the market’s growth through a wide range of in-demand solutions. For example, Mercalis provides integrated patient support services and commercialization capabilities for the entire drug lifecycle, from clinical development to loss of exclusivity. The company’s key advantages include a broad, tech-enabled service suite, deep therapeutic expertise, and strong scalability, positioning it as an end-to-end partner for its clients.

AnovoRx, meanwhile, offers exclusive distribution and patient support for orphan and ultra-orphan pharmaceuticals. The business delivers significant value by streamlining the value chain for manufacturers, improving patient outcomes, and generating consistent revenue from reimbursed product sales as well as recurring data and support service fees.

Throughout the hub services space, it’s also important to note the vital role of technology in a hub service provider’s ability to adapt and specialize to meet a manufacturer’s needs. “Streamlining patient access and medication adherence are two areas where technology and AI capabilities are key differentiators,” says Linsalata. Gift Health’s recent acquisition of Occam Health Services highlights this opportunity. By combining Gift’s pharmacy capabilities with Occam’s front-end patient access and automation technology, the platform will be able to provide a seamless, end-to-end solution for its manufacturer partners.

Under Special Consideration

A shift toward specialty pharmaceuticals and increasing complexity in coverage and reimbursement continue to drive growth across the pharma ecosystem. Demand also remains strong for platforms that can bolster patient engagement through advanced technology as well as data and consulting expertise.

Hub services exemplify this opportunity, offering comprehensive solutions that span the pharma value chain. “Going forward, we expect hub services activity to expand as greater complexity, a focus on complicated therapeutic areas, and a rebound in drug approvals all drive pharma and biotech organizations to outsource to innovative providers,” says Porter.

To further discuss M&A potential within pharmacy and pharma services, please contact our senior professionals.