Covance and Lilly Reach Strategic Agreement

August 18, 2008

Applied Clinical Trials

Covance and Eli Lilly announced a strategic collaboration earlier this month representing an innovative solution between a CRO and pharmaceutical company in response to current industry R&D productivity challenges.

Covance and Lilly Reach Strategic Agreement

Covance and Eli Lilly announced a strategic collaboration earlier this month representing an innovative solution between a CRO and pharmaceutical company in response to current industry R&D productivity challenges. Wendel Barr, Chief Operating Officer of Covance, told Applied Clinical Trials its acquisition of Lilly’s early drug development campus in Greenfield, IN, will grow its current Phase I through Phase IV services, as well as launch new service lines including non-GLP toxicology, in vivo pharmacology, quality control laboratory and imaging services. “We are taking on new services we currently don’t have in our portfolio, and extending our business,” said Barr. “This acquisition accelerates our growth plans in these new service areas and offers these services immediately our other pharmaceutical and biotech clients.”

In addition to the $50 million purchase of Lilly’s Greenfield campus, Covance will provide Lilly with minimum commitment level of $1.6 billion worth of drug development services over the next 10 years. The agreement is non-exclusive. Barr indicated that Covance will grow the Greenfield campus into a world class drug development facility, joining other Covance preclinical facilities in Wisconsin, Virginia, England and Germany. Covance acquired a partially constructed manufacturing facility in Prince William County, VA from Lilly in November 2007, with a scheduled 2011 opening. In addition, there is new Covance medical research campus slated for opening in Chandler, AZ in 2009.

“Major pharmaceutical companies are applying different partner models with CROs,” said Barr. In the Covance/Lilly case, Barr explained that Lilly has the innovation to focus on drug discoveries, and Covance offers the efficiency to focus specifically on drug development. “Lilly will be moving from a fixed cost structure to a variable structure with Covance,” explained Barr. “Pharmaceutical companies are saying, ‘How do I change this business model?’” Barr believes that an alliance like this-which he described as the broadest and most comprehensive in the industry-are the beginning of a broader trend in the industry.

For more information, link to Covance’s press release here. http://ir.covance.com/phoenix.zhtml?c=105891&p=irol-newsArticle&ID=1184293&highlight=

-- Lisa Henderson

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