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Covance inks alliances with Bayer and Eli Lilly

By Nick Taylor , 31-May-2012

Covance has inked deals to provide preclinical services to Eli Lilly’s diabetes operations in China and late-stage support to Bayer Healthcare.

Both deals build on long-standing relationships between Covance and its biopharma partners and as such the near-term significance of the alliances are unclear. Lilly and Covance have worked very closely since the 2008 asset transfer deal and Bayer is also a significant and longstanding client.

In reference to the deal with Bayer, Eric Coldwell, equity analyst at RW Baird, wrote: “While clearly a positive development, we do not anticipate material near-term impact as the relationship has developed over a number of years, likely limiting incremental contributions in the near term.”

Covance will provide Bayer with Phase II-IV and central laboratory services. The deal lacks an asset transfer component or a minimum volume of business but positions Covance to handle the bulk of late-phase work at Bayer. Covance is the only CRO (contract research organisation) named by Bayer.

Securing the deal shows the continued growth of the late-phase business at Covance. Until recent years Phase II-IV operations at Covance lagged behind some of its clinically-focused peers but the CRO has gained ground quickly.

Late-phase growth and market shifts have left preclinical as the underperforming unit at Covance but it received a boost on Wednesday when Lilly chose the CRO to support it in China. At the opening of the Lilly China Research and Development Center (LCRDC) Covance was named as a CRO partner.

In an extension of the global alliance between Lilly and Covance the CRO will support the LCRDC by providing services spanning pharmacology, pharmacokinetic screening and other preclinical research.

The deal is a boost for Covance’s operations in China which it has kept as its Western preclinical CRO peers have cut back. Lilly now has publically known relationships with three CROs in China: Covance for preclinical, WuXi AppTec for clinical trial materials, and ShangPharma for discovery chemistry.

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