The need for outsourced research and development services has caused a huge increase in the number of deals for contract research organizations (CROs) and contract manufacturing organizations (CMOs).  In 2016, 36 acquisitions of CROs and CMOs were announced in 2016, a 157% increase from 2015’s total of 14 deals, according to data reported in the Health Care Services Acquisition Report, 2017.

That pace is picking up. In the first six weeks of 2017, six CRO/CMO deals have been announced,with even more to come. Last week, Reuters reported that Laboratory Corp. of America Holdings (NYSE: LH) is in talks to buy Pharmaceutical Product Development LLC (PPD), a portfolio company of Hellman & Friedman, for $8 billion, including debt.

Just last month, LabCorp announced the acquisition of Mount Sinai’s Clinical Outreach Laboratories for an undisclosed price. Seven patient service centers currently operated by Mount Sinai, one of the largest health systems in New York City, will be added to LabCorp’s existing network of 120 patient service centers in the metropolitan New York City area.

If this deal goes through, it would be larger even than LabCorp.’s $5.6 billion deal for Covance, announced in November 2014. Covance is now a major division, offering global drug development services company to the pharma and biotech industries.

CROs provide outsourced research services, and CMOs, sometimes called CDMOs (contract development and manufacturing organizations), provide comprehensive services from product development through product manufacturing to the pharmaceutical, biotech and medical device industries on a contract basis.

On January 27, 2017, Porton USA, LLC (Shenzhen: 300363), a CDMO that supplies custom drug intermediates and active pharmaceutical ingredients (APIs), acquired privately held J-STAR Research, Inc. Based in New Jersey, J-STAR is a chemistry-based CRO that offers research services to support early phase clinical development of small molecule APIs to the pharmaceutical and biotech industries.

Porton paid $26 million in a stock purchase agreement, and the addition allows Porton to accelerate providing integrated outsourcing services in the development and manufacturing of new drugs.

On February 2nd, 2017, Ampersand Capital Partners purchased Corpus Medical for an undisclosed price. Corpus Medical is a CDMO specializing in interventional medical devices, catheter-based delivery systems and implants. In addition to enhanced capabilities and capacity, further investment into expansion of the management team is expected.