Sanofi signs $2.2bn CRO deal
pharmafile | October 1, 2010 | News story | Research and Development |Â Â CRO, Covance, Sanofi-AventisÂ
Sanofi-Aventis has signed a major deal to contract out a wide range of drug development and laboratory services as part of a bid to improve its R&D efficiency.
The high-level agreement with Covance could boost the contract research organisation’s coffers by up to $2.2 billion over the next 10 years.
The alliance also involves Covance acquiring two R&D facilities from Sanofi-Aventis in Porcheville, France, and Alnwick in the UK for $25 million, along with guarantees that it will maintain employment at the units for five years.
“This alliance with Covance will help us preserve hundreds of valuable jobs in Porcheville and Alnwick, while driving our R&D efficiency for the benefit of the patients,” commented Dr Marc Cluzel, Sanofi-Aventis’ executive vice president of R&D.
“A key strategy for Sanofi-Aventis is to transform its R&D model and discover new medicines through the use of novel technologies and innovative partnerships,” he added.
Under the terms of the deal, Covance will provide wide-ranging drug development support to Sanofi-Aventis in areas such as discovery support, toxicology, chemistry, phase I–IV clinical testing and central laboratory services. The CRO will be the sole provider of central laboratory services to Sanofi-Aventis over the direction of the contract.
Meanwhile, in addition to the revenue stream promised to Covance, the handover of facilities also expands its capabilities in chemistry, manufacturing and controls (CMC) services – including pre-formulation, drug formulation, preclinical and early-stage clinical active pharmaceutical ingredient (API) manufacturing, and radio-labeled chemistry – which it will also be able to offer to other clients.
Covance has been something of a pathfinder in negotiating strategic-level collaborations with big pharma companies, and it is not the first time it has secured a long-term contract linked to a facilities sale. In 2008, it penned the first major R&D outsourcing deal of this type when it agreed to buy Eli Lilly’s Greenfields Laboratories unit in Indiana, USA, in return for a 10-year service provision contract worth up to $1.6 billion.
Drugmakers like the arrangements, as they can remove the cost of maintaining a facility – particularly attractive if it is not operating at full capacity – while guaranteeing continuity of service. And of course working with one large, preferred supplier reduces the level of effort required to oversee multiple contracts with smaller CROs.
Lilly said earlier this year that its arrangement with Covance was already paying off in cost and efficiency terms, and it had decided to shift additional staff over the Greenfields operation.
Phil Taylor
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