Contract research organizations (CROs), like contract development and manufacturing organizations (CDMOs), have been popular targets for private equity firms and strategic buyers for years. The deals seem to come in waves, and the healthcare M&A market may be in for a tsunami this year.

In 2013, some 20 transactions for CRO/CDMO targets were announced, with some hefty price tags attached. Royal DSM paid $1.95 billion to buy Patheon. Other big deals that didn’t disclose prices came from KKR & Co. (NYSE: KKR), which acquired both PRA International and ReSearch Pharmaceutical Services that year.

CRO deal volume rose a little in 2014 (27 deals), then ebbed in 2015 (11 deals). The tide began to rise again in 2016 (31 deals) and reached tidal-wave status in 2017, when 54 deals for CROs and CDMOs were announced. In that year, Patheon was sold again, this time to Thermo Fisher Scientific (NYSE: TMO) for $7.2 billion. The Carlyle Group (NASDAQ: CG) sold its majority interest in Pharmaceutical Product Development, LLC to Hellman & Friedman for $9.05 billion.

In 2018, the tide was running out again, relatively speaking, with 34 deals announced.

Through mid-April 2019, nine CRO deals are on the books. The latest is Catalent, Inc.‘s(NYSE: CTLT)  $1.2 billion deal for Paragon Bioservices, a Baltimore, Maryland-based CRO backed by NewSpring Capital and Camden Partners. Paragon  specializes in adeno-associated virus vectors, the most commonly used delivery system for gene therapy.

We recently spoke with David Blume, co-founder and managing director at Edgemont Partners. The market is drawing a lot of attention from private equity firms that are competing agressively for platforms with potential. “Large private equity firms are coming down into the middle market,” he noted. “The largest global PE firms are competing with 100% equity offers.”

Edgemont’s auction processes in this market attract strong interest and multiple bidders, he said. There’s still plenty of inventory, too. “We have a record backlog now,” Blume told us. “We’re expecting a record year.”

Watch out for the CRO tsunami.