Contract research organization (CRO) Covance helps pharmaceutical and biotech companies worldwide develop new drugs by providing the fullest range of testing services from preclinical investigations all the way through designing and carrying out human clinical trials, and conducting post-marketing studies to determine if drugs are safe and/or effective. Services include toxicology studies and biostatistical analysis. Among the company's customers are pharmaceutical, biotech, and medical device companies. Covance also offers laboratory testing services to companies in the chemical, agrochemical, and food industries. The company is owned by lab services giant LabCorp.
Change in Ownership
In early 2015 the company was acquired by LabCorp for some $6.2 billion. The combined company is a global leader in health care diagnostics, bringing Covance's contract research business to LabCorp's existing prowess in medical testing. Covance operates as a wholly-owned subsidiary.
Covance has offices and labs in more than 30 countries and provides trial activity in more than 100 countries in across the Americasin the Americas, Europe, and the Asia/Pacific region. It is expanding its clinical development services particularly in Eastern Europe and Asia. The company has also beefed up its presence in South and Central America, adding or expanding offices in Argentina, Brazil, Chile, Mexico, and Peru. Despite its extensive international operations, however, the US market continues to make up about 50% of Covance's annual revenues.
Covance's revenue is split between early development and late-stage development services. Covance's late-stage development segment accounts for a little more than half of revenues and includes its massive central laboratory services. Its central lab facilities provide testing of urine, blood, and tissue samples from patients enrolled in drug trials. Other services in that segment include design and management of late-stage clinical trials and commercialization services, including post-marketing studies and various marketing consulting services.
Its Early Development segment provides preclinical toxicology testing to determine a drug's effects on animals and chromosomes, as well as and chemical stability testing. The division also produces monoclonal antibodies and lab animals used in drug research, and it provides early stage clinical services such as pharmacology testing in humans. For its chemical and food industry customers, Covance provides early development services such as testing pesticides for risks to humans and determining nutritional information for food labels. It also offers bioanalytical testing services to determine the appropriate dose and frequency of drug application from late discovery evaluation through Phase III clinical testing on a full-scale, globally integrated basis.
Sales and Marketing
Covance serves more than 1,000 customers from the pharmaceutical, biotechnology, and medical device industries, as well as selected clients in the chemical, agrochemical, and food manufacturing industries. The company operates a direct sales force in primary markets in the Americas, Europe, and the Asia/Pacific region. It functions largely by entering into long-term contracts with its clients, a strategy that gives Covance some stability in the fragmented drug-development industry.
Before its acquisition by LabCorp, Covance had reported steady revenue growth over the last few years. In 2013 the company reported a 10% increase in sales to some $2.6 billion.
The company’s strategy is to provide services that will generate high-quality and timely data in support of new drug approval or use expansion. In 2015 it launched the Covance Early Phase Development Solutions, a multi-disciplined approach to early drug development that generates greater value in asset development and achieve accelerated delivery timelines.
In 2014 Covance opened a new 10,000 square foot laboratory within its existing facility in Harrogate, England, which will complement its existing laboratories in Wisconsin, Michigan, Indiana, and Singapore and will help Covance continue to promote food safety and nutritional health on a global scale.
To meet growing client demand, along with the expansion of its global bioanalytical footprint, in 2014 Covance made new investments in facilities related to biologics development. As part of the plan, the company invested in a large molecule bioanalytical space co-located with its central laboratory facility in Indianapolis.
That year it also established an innovative research collaboration with Frenova Renal Research, a Fresenius Medical Care North America company, to find more effective treatments for patients living with chronic kidney disease and end stage renal disease . The collaboration allows Covance to use Frenova’s database (the world’s largest renal database) to conduct research on behalf of its biopharmaceutical clients.
Mergers and Acquisitions
Covance's acquisition strategy in recent years has taken advantage of the industry trend to outsource services that companies once conducted in-house, buying up research facilities of large drugmakers (such as Eli Lilly, Sanofi, Kellogg, and Merck) and then forming long-term contracts to provide R&D services to the companies. The new facilities added chemistry, formulation, and active pharmaceutical ingredient (API) manufacturing capacity to Covance's operations. To expand its food safety services, the company also acquired laboratory operator TRAC Microbiology.
In 2014 the company acquired Medaxial, a London-based value communication consultancy to enhance Covance's ability to bring value communication solutions to its clients. (Medaxial focuses on defining and communicating the value of a biopharmaceutical product or medical device to healthcare payers and the stakeholders who influence them).