Pharma services — the businesses that support the pharmaceutical industry's research, development, manufacturing and commercialisation activities rather than developing drugs themselves — have been one of private equity's most consistently attractive healthcare sub-sectors for over a decade. The investment case rests on structural tailwinds that have remained durable through multiple market cycles: pharmaceutical companies continue to outsource an increasing proportion of their R&D and manufacturing activities, driven by cost pressures, capital efficiency demands, regulatory complexity and the need for specialist capabilities that are not economical to build in-house.

The pharma services universe encompasses three primary categories. Contract Research Organisations — CROs — provide the clinical trial management, data management, biostatistics, regulatory affairs and pharmacovigilance services that pharmaceutical companies require to develop new drugs. Contract Development and Manufacturing Organisations — CDMOs and CMOs — provide the chemistry, manufacturing and controls capability to produce active pharmaceutical ingredients and finished drug products. And outsourced commercialisation services businesses provide the sales, marketing, market access, medical affairs and patient services infrastructure that pharmaceutical companies deploy to launch and maintain their products.

Asset-light models within this universe — businesses that provide specialised expertise, technology platforms and data rather than capital-intensive laboratory or manufacturing infrastructure — have attracted particularly strong investor interest in 2026, because they combine the structural tailwinds of the broader pharma services market with the financial characteristics that private equity and growth investors prize most: high recurring revenues, low capital expenditure requirements, strong margins and defensible competitive positions built on proprietary data or specialist expertise.

Leading investors are seeking out differentiated assets and emphasising scale, revenue visibility, and selective platform and tuck-in plays to lean into value creation. The valuation gap between seller expectations and buyer appetite that characterised 2023 and 2024 has narrowed but not closed, meaning that deal structuring creativity — earnouts, deferred consideration, co-investment arrangements — remains a feature of completed transactions.

The asset characteristics commanding the strongest investor attention in pharma services in 2026 are revenue visibility and recurring revenue models — CROs with long-term master service agreements and CDMOs with capacity reservation contracts are valued more highly than those dependent on project-by-project engagement; proprietary data assets — businesses that have accumulated clinical, regulatory or commercial data that is genuinely difficult to replicate represent a durable competitive advantage that is not eroded by price competition; AI integration capability — the convergence of AI with pharma services is accelerating significantly in 2026, with 2026 kicking off with a stream of AI platform deals across pharma, signalling a cultural shift of investing in AI infrastructure for broad discovery.

The regulatory environment adds another dimension. Financial and strategic interest will continue to prioritise therapeutic areas and therapies that can reset standards of care, with cardiometabolic, CNS, oncology and immunology seeing healthy M&A activity in 2026. CROs and CDMOs with established regulatory relationships in these therapeutic areas — and particularly those with EU-GMP certification and MHRA or EMA approval experience — command meaningful premiums over generalist competitors.

Healthcare is a targeted sector in Europe for US private equity, accounting for half of the 10 biggest US private equity-backed deals in the region in 2025. Notable transactions included GTCR LLC's $4.8 billion acquisition of Zentiva Group and the $1.8 billion acquisition of Swixx Biopharma SA.

The UK pharma services sector benefits from a combination of structural advantages — the MHRA's post-Brexit regulatory pathway has created both a degree of autonomy from EU regulatory timelines and, in some cases, accelerated approval pathways for innovative medicines that create additional demand for UK-based regulatory affairs and clinical services capability. UK life sciences VC investment reached £516 million in Q1 2026, a 17% quarterly increase, with the UK accounting for 57% of European biotech venture capital.

Healthcare and essential services are expected to remain important sectors in UK private equity, with recurring revenue models central to mid-market PE strategies. KPMG identifies healthcare as one of the sectors where record levels of UK PE dry powder are most likely to be deployed in 2026 — driven by the combination of structural demand growth, recurring revenues and the availability of fragmented markets that support buy-and-build strategies.