Acquisition Research

Identifying Buyout opportunities in the clinical laboratory industry in asia


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Under the Microscope:

The Evolving Clinical Lab


  • Globally, the clinical laboratory industry is attractive

    • Stable revenues due to long-term contracts from hospitals/health care providers

    • In 2013, EBITDA margins globally were at 15.4%, significantly higher than the 5-year average of 13.1%

    • Consolidation is taking place in developed markets, enabling for stronger bargaining power against customers and suppliers


  • In Asia, the clinical lab industry becomes more attractive as the healthcare market becomes more developed.  Attractive buyout opportunities exist in key countries such as Indonesia, Malaysia and Korea for different reasons:

    • In Indonesia and Malaysia, the clinical lab industry will become more attractive as the industry evolves towards a centralisation business model of core activities

    • In Korea, the clinical lab industry will become even more attractive as hospitals carve out operations and begin to outsource non-core activities


  • The target companies are scale players in their respective markets and have the opportunity to realise the benefits of economies of scale as the market evolves

    • The target companies are market share leaders or strong followers with strong financials

    • Each target appears to have strong networks and management capabilities to manage change and to positively influence the pace of regulatory change


  • Copycat deals can be considered in Asia.  M&A globally is quite vibrant in the clinical lab space with over 731 transactions since 2005 to 2013 mostly in advanced markets.  In Asia, there is an opportunity to take a leading position by either facilitating consolidation or transformation.


  • In Asia, while most private equity activities have focused on India and China, there is an opportunity to lead and close a transaction in the core countries


  • Value add can be achieved by focusing on facilitating consolidation in the industry or by focusing on transforming their business models


  • Multiple exit opportunities exist due to the vibrant activity of strategic players globally who are trying to consolidate and globalise operations and with private equity players who are quite active as well.  IPO’s can also be considered as the players achieve critical scale