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It costs $1 billion on average to develop a new drug in the pharmaceutical industry, according to the Journal of the American Medical Association.
That's the same price it costs to buy an entire marketing firm devoted to selling drugs. According to Axios, on Monday asset manager Nova plopped down a cool billion for Medical Knowledge Group (MKG), which specializes in getting those costly drugs to the right customers in the often arcane world of medical marketing.
High Tabulation for Communication
Today's drug therapies are frequently designed for smaller and smaller patient populations, as technologies like gene therapies allow pharmaceutical developers to target rare conditions that might only impact tiny slivers of the population. That makes for a complicated commercial business — a Super Bowl ad might do it for everyone from State Farm to Klarna to Huggies to Crypto.com, but traditional advertising doesn't make any sense when you're trying to reach a handful of people with a rare genetic disease.
That's the value of MKG, which uses data analytics to track down and market to healthcare professionals, targeting those who deliver treatments rather than front-facing consumers and patients. Getting that inside baseball intelligence is something investors have shown they're happy to pay a premium for:
- Novo outbid several other potential buyers, valuing MKG at 20.5 times its 2021 earnings.
- MKG's current owner, Court Square, bought the firm two years ago for just $330 million, or 13x EBITDA.
Spending Spree: This deal is no flash in the pan — medical comms firms are all the rage, since their customers are biopharmaceutical giants battling it out over $340 billion in annual sales in the US alone. Of note, last year TPG invested in medical communications agency BGB Group at a $760 million valuation and Eversana bought life sciences marketing company Intouch Group for $950 million.