LabCorp bolsters biologics capacity of Covance unit in UK
- Covance Drug Development, a subsidiary of the giant LabCorp, is expanding its Harrogate, U.K.-based biopharmaceutical chemistry, manufacturing and control (CMC) capabilities, creating new jobs and expanding Covance's biologics business.
- The laboratory extension, due to open later this year, is in response to increasing demand for the development and manufacturing of biologics, ranging from biosimilars to vaccines, antibodies and cell and gene therapies.
- Although LabCorp is building out Covance's biologics chops, the unit is also going through LabCorp's "LaunchPad initiative," designed to cut costs and streamline the business.
The CMC step of the development and manufacturing process looks at the safety, quality, identity, strength and purity of drugs and drug candidates. Outsourcing CMC has perhaps not been done as widely as other parts of R&D, but LabCorp's expansion of Covance Drug Development business points to growing demand.
"We have seen increasing demand from our partners to support their rapidly expanding biologic pipelines and commercial product portfolios"” said Steve Street, head of Covance Early Development.
First quarter results for Covance were lackluster, though, with net revenue falling 1.8% due in part to the cancelation by sponsors of two large clinical studies in late 2016.
LabCorp hopes to find $100 million in "cost synergies" related to the 2015 acquisition of Covance over a three-year period ending in 2017.
Putting Covance through the LaunchPad initiative is expected to lead to pre-tax savings of $20 million in 2017 and $45 million annually thereafter, with some offsetting charges tied to severance and facility-closure costs.
Interestingly, the announcement of the biologics expansion contained a statement from Greg Hands, the U.K. Minister of State for Trade and Investment. The biopharma industry is a major contributor to the U.K. economy, but U.K.'s pending exit from the EU has cast doubt on the prospects for new investments and growth in the sector.
- Laboratory Corporation of America Press release
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