Covance got some bad advice when it agreed to a roughly $6 billion buyout from LabCorp, according to an investor lawsuit, which alleges that chief dealbroker Goldman Sachs had a conflict of interest all along.
Under pressure from cuts in reimbursements and a general malaise for doctor-ordered diagnostics tests, LabCorp's ($LH) $6 billion cash and stock deal for contract drug development player Covance ($CVD) might be the right diversification prescription to ease a financial headache.
Diagnostics giant LabCorp is buying its way into the upper ranks of the CRO business, signing a deal to pay $5.6 billion for Covance and create an end-to-end testing conglomerate.
LabCorp is diversifying. The big diagnostics player has swooped in to buy the contract research organization Covance for $6.1 billion in cash and stock, confident that a combination of its expertise with Covance's approach to contract drug development will make for a successful merger.
Covance has joined forces with Novartis to develop new ways to help drug developers quickly integrate and analyze huge swaths of study data.
Covance is teaming up with Frenova Renal Research, an arm of dialysis magnate Fresenius Medical Care, tapping the organization's expansive database to spotlight the most effective treatments for patients with kidney ailments.
Covance posted a strong revenue performance in the second quarter thanks to better-than-expected results from its early-stage development segment, but the CRO is inching back its full-year expectations to account for some outgoing assets.
As last week's BIO conference well illustrated, biotech companies go to great lengths to flaunt their assets in front of potential partners from Big Pharma. Global CRO Covance is developing a system it believes can make that process more efficient: an online platform that allows drug developers to securely list their up-for-license molecules for would-be collaborators.
Global CRO Covance is looking to expand its share of the drug-commercialization space, buying up a U.K. market access specialist to help its clients sell their approved products.
Covance's shares fell as much as 10% after the CRO missed its internal sales goals in the first quarter and dialed down its revenue projection for the year.