Sanofi Chooses U.S.-Based Covance As 10-Year R&D Partner
September 30 2010 - 6:51AM
Dow Jones News
French drugs maker Sanofi-Aventis (SNY) has chosen New
Jersey-based contract research company Covance Inc. (CVD) as a
partner for research and development in a 10-year in a deal that
could be worth up to $2.2 billion.
Under the deal, Covance will provide R&D for Sanofi in the
fields of toxicology, chemistry and clinical phase I through phase
IV trials. Payments will range from around $1.2 billion to $2.2
billion, Covance said in a statement.
Sanofi is also selling its R&D sites in Porcheville, France
and Alnwick in the U.K. to Covance for $25 million, Covance said
Thursday.
The move will save "hundreds" of jobs, Sanofi research and
development executive vice president Marc Cluzel said in the
statement. Covance said it will "maintain employment" on the sites
for at least the next five years.
Under the leadership of Chief Executive Chris Viehbacher, Sanofi
has significantly cut back on internal R&D projects. Viehbacher
has favored forging alliances and licensing deals with drug
developers to fill out Sanofi's pipeline of new products. He has
said it is difficult for a company as large as Sanofi to make
efficient use of R&D resources internally.
Such moves are common in the industry which is increasingly
turning to forming partnerships with peers or contract research
organizations, or CROs for developing new drugs. Peers Eli Lilly
& Co (LLY) and GlaxoSmithKline PLC (GSK) are among drugs
companies who use services provided by CROs.
Covance's competitors include Quintiles Transnational Corp.
(QTRN), Parexel International Corp. (PRXL) and PPD Inc.
The sale of Sanofi research sites to Covance is expected to be
completed before the end of the year, Covance said.
At 0953 GMT, Sanofi shares traded down 1.2% at EUR48.87, just
below the French CAC-40 index, which traded down 0.7%.
By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 1773;
mimosa.spencer@dowjones.com