John Watson, chief commercial officer at Covance, said at the 2013 Bank of America Merrill Lynch Health Care Conference in Las Vegas last week that funding for outsourced preclinical work has generally “dried up,” which may be due to a shift in developing more biologics that require less pre-clinical testing than small molecules.
Watson said Covance has a lot of experience in work with biologics and that it needs to package its services differently so that the marketplace “understands our experience better.” He gave the example of Charles River Laboratories as a CRO (contract research organization) that has marketed its experience in biologics well.
In addition, Covance is looking to further leverage its “market-leading lead optimization abilities,” which were improved by the 2009 acquisition of Eli Lilly’s Greenfield, Indiana laboratory for $50m. The facility offers toxicology, in vivo pharmacology and other preclinical services.
Meanwhile, the company’s clinical pharmacology business is looking to take advantage of some competitors’ recent announcements that they closed their clinical pharmacology businesses’ in the first quarter this year, Watson said. He said Covance is working with some partners on deals that could be “viable in the long term.”
Clinical, Central Lab Work
Covance’s clinical and central lab work is “what really distinguishes” the company from its competitors, especially since it can utilize a database to help select clinical trial sites more likely to recruit patients, Watson said.
But as far as striking more deals, like the 10-year $2.2B deal it inked with Sanofi, Watson predicts there will be more staff-type arrangements than asset and staff arrangements. He noted that the CRO is having more conversations with big pharma companies looking to shift their R&D models to be more virtual and others looking into end-to-end outsourcing from IND (investigational new drug) to NDA (new drug application). Watson said the end-to-end type of R&D models that big pharma are looking into would be a boon for Covance.
He gave the example of how Covance saved one of its partners $24m in site selection and start-up costs because of the number of sites it recommended, as opposed to the number of sites the client wanted to use for a specific study. He also noted that the CRO beat its client’s timeline by almost nine months.