Shaw & Co, the specialist corporate finance advisory firm, has launched the seventh in a series of 12 in-depth sector reports that offer an industry’s SME business leaders a powerful benchmarking tool to aid their decision making.

The seventh report covers the Health & Life Sciences (H&LS) Sector marketplace and segments over 1,300 businesses with earnings in excess of £1m by size and subsector to track their performance, profitability, debt levels and M&A activity.

The report’s key findings include:

• Covid-19: Covid-19 has created significant challenges and tailwinds. Nevertheless, high profit margins of between 33% - 40% can be achieved regardless of scale.
• Big Players: 6% of companies generate 71% of turnover within the industry. Although healthtech has accelerated because of the pandemic it is unlikely to adversely affect the high profit margins to be made across the board.
• Mergers & Acquisitions: Competitive rivalry is fierce given the tailwinds the industry is experiencing, driven by both the pandemic and healthtech innovation. M&A activity is expected to remain buoyant given the overall sentiment and for lending markets to be supportive.
• Funding Opportunities: If a SME is a good business with solid growth plans it could be borrowing up to four times its earnings (Ebitda) for growth projects and capital investment. There is now a significant opportunity for alternative lenders to lend into a sector that is already well supported by traditional lenders.

"The Health & Life Sciences industry remains a very high performer."

Rick Martignetti
Report editor

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Rick Martignetti, Manager - Debt Advisory, Shaw & Co, and editor of the report said: “H&LS remains a very high performer in terms of profitability with high profit margins of 33%-40%. There are some huge companies in this sector including established private healthcare providers such as BUPA, large care home providers, medical research and pharmaceutical companies. Although healthtech has accelerated because of the pandemic it is unlikely to adversely affect the high profit margins to be made across the board.

“In terms of M&A then activity is buoyant with strong buyer appetite across most sectors. Although Covid-19 has hit some businesses hard, others have seen a strong boost in activity. In either case, the pandemic does not appear in general to have dented M&A activity and if anything, there appears to be a pent-up demand.”

A full copy of the report is available for free download here.

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