This past week Permira, a global investment firm based in the United Kingdom, spent $2.4 billion for Cambrex Corporation (NYSE: CBM). Cambrex is a premier contract development and manufacturing organization (CDMO) in the small molecule space and provides drug substance, drug product and analytical services across the entire drug lifecycle.

The $2.4 billion purchase price includes the company’s net debt, for 4.2x revenue and 16.3x EBITDA,  represents a 47.1% premium to Cambrex’s closing price of $40.78 on August 6.

The target reported a number of its own acquisitions recently, making the CDMO a more attractive buy. Cambrex acquired Halo Pharma in 2018 and Avista Pharma Solutions in 2019, and the purchases added drug product manufacturing and a full range of early-stage and analytical testing services, allowing Cambrex to broaden its customer base over the full lifecycle, from preclinical to commercial stage.

Permira’s acquisition follows a pair of billion-dollar deals this year for contract research organizations (CRO) and CDMOs, two of the more popular company types in the Other Services sector. Through August 9, 2019, CROs and CDMOs account for 22% of all transactions in the Other Services sector, according to our Deal Search Online database, but comprise 54% of the announced prices, approximately $6.3 billion.

The first billion-dollar deal in this sub-sector took place back in March when Thermo Fisher Scientific Inc.  (NYSE: TMO) acquired Brammer Bio from Ampersand Capital Partners for $1.7 billion. Brammer, a CDMO that provides clinical and commercial supply of vectors for in vivo gene therapy and ex vivo gene-modified cell therapy, will become part of Thermo Fisher’s pharma services business within its Laboratory Products and Services Segment. The company is expected to generate roughly $250 million in 2019.

Following that in April, Catalent, Inc. (NYSE: CTLT) bought Paragon Bioservices, Inc., a CRO offering development services, delivery technologies and supply solutions for drugs and biologics, for $1.2 billion.

Paragon was backed by NewSpring Capital and Camden Partners. Catalent hopes the acquisition will transform the company’s business profile and accelerate its revenue and EBITDA growth over time. The gene therapy market is expected to have sustained growth of 25% in the medium term and Paragon is expected to outpace this market growth for the foreseeable future.

Much like services sectors such as Physician Medical Group or Behavioral Health Care, private equity makes up a significant portion of the buyers for CROs and CDMOs. So far in 2019, these firms accounted for 36% of the transactions, including Permira’s takeover of Cambrex, the second largest deal in the sector so far in 2019.