When it comes to the markets—particularly good, strong markets—everyone is often waiting for the other shoe to drop. As it relates to deal activity in the pharma services sectors, the other shoe seems nowhere in sight.

Baird expects a number of transactions to be announced in the coming months, mostly acquisitions of small- to mid-sized companies that are well defined and well differentiated. Companies that have unique ex-U.S. capabilities, lab services, technologies, customer relationships, or in one instance, solutions to meaningfully improve the efficiency of traditional clinical trial bottlenecks, well, those companies will be the belle of the ball.

Buyers, particularly larger sector participants, continue to demonstrate a growing appetite for M&A as a means to quickly fill capability gaps or add tools and technology to set them apart from competitors. This is particularly the case in the outsourced clinical development sector. Driving this activity is a confluence of factors including management teams’ increasing confidence to identify, evaluate, acquire, integrate and generate returns from acquisitions. Also, those who historically might have been skeptical of M&A are now converts, enticed by high-quality targets that represent the opportunity to provide a comprehensive suite of services. And, as sellers evaluate the risk/reward of transacting now versus later, most signs are prompting them to sell sooner rather than later.

We’ve seen these deal drivers playing out in the market a lot in recent weeks.  For example, ICON’s February acquisition of MediMedia Pharma Solutions, which included MediMedia Managed Markets and Complete Healthcare Communications, adding commercialization and outcomes reporting capabilities. MediMedia Managed Markets provides strategic payer-validated market access solutions, and Complete Healthcare is a leading medical and scientific communications agency focused on medical affairs, commercial and brand development in the life sciences.

Tim Search, president of MediMedia Pharma Solutions, said, “The combination of the commercial, scientific, and market access expertise of MediMedia and ICON creates an unparalleled offering that can inform product investment decisions and establish and communicate product value. With the shift to evidence-based medicine and value-based pricing, we are excited about the expanded expertise and capabilities our relationship with ICON brings to our combined customers.”

Another example is the PPD-SNBL (Shin Nippon Biomedical Labs Ltd.) joint venture announced in December, which will provide a full range of clinical development services in Japan, including Phase I-IV clinical trial monitoring, project management, site intelligence and activation, biostatistics, data management, medical writing, pharmacovigilance, regulatory and FSP services. The joint venture is the combination of SNBL’s clinical research division and PPD’s clinical development operations in Japan, and it will have offices in Tokyo, Osaka and Kagoshima with approximately 400 clinical professionals.

Finally, Quintiles surprised a number of industry observers by acquiring Encore Health Resources in July. Encore’s primary business is focused on implementation and advisory services around electronic health records (EHR), which will now allow Quintiles to offer its clients additional real-world outcomes measurement tools and enhance its relationships with payers and providers. The former is important with regard to assisting pharmaceutical and medical device sponsors with reimbursement and market access assessments. The latter could be useful in efficiently locating trial-naive patients and potentially expanding its network of investigators.

Quintiles CEO, Tom Pike, had this to say, “This signifies the increasing importance of leveraging EHR and real-world information to inform our customers and improve their probability of success. Encore has significant EHR expertise, strong relationships with large U.S. provider networks and academic medical centers, as well as experienced consultants, proven tools, and methodologies. It will be a key strategic addition for our business that will extend our services suite.”

All of these transactions illustrate the desire on the part of the buyer to add unique and differentiated capabilities—potentially and ideally, ones that pharma and medical device sponsors value. That motivation to acquire new and different offerings—now an imperative of competing in the sector—isn’t subsiding any time soon. In fact, providers who are not actively assessing possible acquisitions will likely be left behind. The economic backdrop? Low interest rates, cheap debt, strong balance sheets, reasonable valuations—that’s just fuel for the fire. No other shoe here. Not for a while.