It’s taken roughly 30 years to get the industry to 50% outsourced, and “we think it’ll go to 70% a whole heck of a lot faster than it got to 50%” because of the needs of our clients, Herring said at the Jefferies 2014 Global Healthcare Conference on Tuesday.
His comments come on the heels of similarly optimistic comments from Covance’s chief commercial officer John Watson, who said last month that Covance is looking to take advantage of the industry’s shift to early biologics development and lead optimization.
Strength in its central labs business, which Herring said is a “good surrogate for the overall health of the clinical trials market worldwide” is also going to boost the company’s bottom line as it currently has about a 40% market share.
As the largest early development company in the CRO industry, Herring noted that the company expects “a very sharp increase” in the second quarter in terms of operating margin and revenue, which will be higher than the 4
“In toxicology, the bottom line is that high-probability compounds grow by about 2% annually,” he said, noting the boom in biotech investments boosted the bottom line previously.
The expected growth comes as Covance now has a larger presence outside the US than inside the US, with large labs in Geneva, Shanghai, Tokyo and Singapore, Herring said.
However, he noted that the company, which previously was in 10
Herring explained that Covance has one of the lowest employee turnover rates, which helps the company gain longer, more intensive strategic deals. The company inked a 10-year, $2.2bn deal with Sanofi in 2010, which was in addition to other multi-year deals with Lilly and Bayer.
Covance is also looking to hire about 30 “very high-end data scientists” to leverage their existing data and combine it with real-world evidence to improve drug development, Herring added.
The company is also developing an application for risk-based monitoring to help provide more IND-enabling and proof-of-concept enabling studies. Last year Covance provided 71 IND-enabling packages, which is the largest number ever for the company, Herring said.