BMS Selects Quintiles as Third Preferred Labs Provider; Icon May be Dropped

By Zachary Brennan

- Last updated on GMT

Related tags Laboratory Contract research organization Labrador retriever

BMS Selects Quintiles as Third Preferred Labs Provider; Icon May be Dropped
BMS Selects Quintiles as Third Preferred Labs Provider; Icon May be Dropped
Bristol-Myers Squibb (B-MS) has signed up Quintiles as a central labs supplier, prompting more questions about Icon’s status as a preferred provider of laboratory services.

The five-year contract naming Quintiles as B-MS’ third central lab services preferred provider came a week after the US drugmaker unveiled LabCorp as its second preferred lab contractor behind Icon, which has supplied such services since 2010.

News of the LabCorp deal​ coincided with a 3% drop in Icon’s share price on April 1.

At the time analysts said the decline reflected investor fears Icon would see less B-MS central lab work but most observers were confident the Irish contract research organisation's (CROs) wider strategic relationship with the US drugmaker would continue.

John Kreger from William Blair said while investors viewed the LabCorp news as a sign Icon’s business with B-MS is at greater risk of loss or reduction, the Irish CRO’s “overall relationship with Bristol is likely to continue and note that the lab is a relatively small part of the company's earnings base​.” 

Similarly, Tim Evans from Wells Fargo said: “We view the addition of Labcorp as a preferred provider as a potential negative for Icon, since the desire to expand the Labcorp relationship could mean the Icon relationship will shrink​,” although he too predicted it would not impact Icon’s other business with B-MS.   

The response to the new Quintiles agreement has been similar.

Baird analyst Eric Coldwell told that: “I believe that Icon’s role with BMS is ending, at least for central labs, but I don’t know that for sure. I have expected this for some time, so it’s not a surprise​,”

Icon will report its quarterly earnings in two weeks and the status of its relationship with BMS “will become clearer​,” Coldwell said.

Quintiles IPO

The other factor to consider is that - in February​ - Quintiles announced its intention to rejoin the public markets and launch an initial public offering (IPO)​ in the near future.

As a public company, Quintiles will be under pressure to win the largest possible share of the estimated $50M to $75M B-MS spends on central laboratory services which is certain to have an impact on Icon in the longer term if the firm does continue to provide such services for the drugmaker.

Related topics Clinical Development Phase III-IV

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