Covance: company positioned to capitalize on increase in pharmaceutical outsourcing to CROs

By Jennifer Lanning Drey

Portland, Ore., Nov. 14 - Covance, Inc. believes its revenues will grow as the level of outsourcing by large pharmaceutical companies to contract research organizations (CROs) also continues to increase, Joseph Herring, Covance's chief executive officer, told investors and analysts Tuesday at the 2006 Stanford Growth Conference.

"The demand picture has been very stable over the last five years, and Covance has been in a position to capitalize on that," he said.

Last year, Covance completed 34 Investigational New Drug application-enabling packages for companies with compounds in early development.

Pharmaceutical outsourcing has been growing at about 10% per year, Herring said.

He attributed the growth in outsourcing, in part, to the fact that clinical trials are increasingly being performed on a global scale.

In addition, he said CROs have developed much of the technology and skills to support the large pharmaceutical companies in their clinical work.

"For cost, geographic efficiency and technical reasons, outsourcing continues to grow," Herring said.

Covance's strategic focus for the future includes providing integrated drug development solutions by offering a faster turnaround time on trials than companies can achieve when performing them in-house.

Additionally, the company is driving strategic outsourcing by putting dedicated space agreements in place with large pharmaceutical companies. Under the agreements, the pharmaceutical companies use Covance's facilities as an alternative to building or maintaining their own facilities, he said.

Covance is a drug development services company based in Princeton, N.J.

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