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Covance CEO Predicts Greater Outsourcing for Clinical Trials

July 3, 2014

Covance CEO Predicts Greater Outsourcing for Clinical Trials

The chief executive officer of Covance Inc. has predicted outsourced clinical trials and other aspects of pharmaceutical and biologic products will continue to make gains. Speaking earlier this month at the Jeffries 2004 Global Healthcare Conference, Covance CEO Joseph Herring forecast that in the near future drug and biologic product makers will devote as many as 70% of future research and development efforts to outside research firms, not their in-house programs.

clinical-trials-outsourcedHerring observed that while it has taken contract research organizations (CROs) about 30 years to account for roughly half of all clinical trials, outsourced clinical trials would grow to as much to as 70% of clinical testing “a whole heck of a lot faster,” since outsourced research better met the needs of biopharmaceutical firms.

While not detailed in Herring’s speech, other Covance statements spell out the reasons the company predicts continued market share gain for outside clinical research firms. Among those factors, in Covance’s view, are producers’ commercial and therapeutic interests in bringing new products to market more quickly, and the emergence of biotechnology, which has significantly increased the number of new compounds in the early stages of development.

The growing size, complexity and geographic range of clinical trials have also made increasing demands on developers’ technical and regulatory expertise. In addition, some product makers may turn to outsourcing as a way to access state-of-the-art equipment and researchers without having to make fixed investments, thus freeing them to reallocate their investments into other areas, such as manufacturing.

In his speech this month, Herring also pointed to his company’s leading place among central laboratory testing as a useful proxy for the health of clinical testing globally. A survey done about a year ago by the Life Science Strategy Group queried over 250 physicians active in clinical trials on which contract research organization laboratories they used. As in a similar study done two years earlier, Covance was the most-named firm, cited by about 40% of the doctors surveyed in the most recent study. Quintiles, PPD, Quest Diagnostics, and Icon were the other most commonly chosen CROs, in that order.

In May 2003, Covance’s chief commercial officer told that year’s Bank of America Merrill Lynch Healthcare Conference that the company was shifting resources to meet growing demand for development work for new biologic products, attributing a decline in industry spending on preclinical. Covance says it has moved from 10th to 5th place among CROs working on developing biological products, and now trails only Quintiles, PPD, Parexel and Icon.

Covance claims it has a competitive advantage in its unusually broad range of medical and lab expertise, with an established presence in services ranging from toxicology and preclinical evaluation, through design and implementation of clinical trials. Based in Princeton, New Jersey, Covance has operations in over 30 nations and conducts clinical trials in more than 100.

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