LabCorp is going deep into the CRO business.
A little more than two years after paying $6.1 billion for Covance, LabCorp has now followed up with a $1.2 billion cash deal for Chiltern, adding another 4,500 clinical outsourcing workers around the globe to its employee roster.
The Chiltern acquisition is designed to get LabCorp deeper into new and mid-sized biopharmas. Its Covance group was already a top-10 player when LabCorp stepped in with its deal. In a statement, the company noted it has handled more than 1,800 clinical trials over the past 5 years for clients.
The 2017 forecasted revenue plus EBITDA sits at $550 million and $95 million.
The CRO business has been consolidating for years, with private equity groups leading the way to build up these global organizations. The trend here fits neatly into a decade-long move in biopharma to do more and more outsourcing on the research side. As we noted in the most recent survey of Endpoints 100 biotech executives, that trend has been headed nowhere but up.
Half of our E100 survey group said last fall that they outsourced “most” of their development work. Another 20% said about half was done at a CRO. And 48% expected the amount of outsourcing work they did would rise this year. Buyouts make a lot of sense in a growth environment, as we saw in yesterday’s announcement that Evotec bought rival Aptuit for $300 million, adding to its discovery and development expertise.
“Since LabCorp acquired Covance, we have grown the CRO business to nearly $3 billion in annual revenue,” said John Ratliff, CEO of Covance. “We now join with Chiltern to create a market-leading CRO, with more than 20,000 talented employees around the world. The addition enhances Covance’s offerings as a major partner serving the top 20 biopharma segment and expands our current offering to include a dedicated focus on the high-growth emerging and mid-market biopharma segments. We are very pleased to welcome the Chiltern team to the LabCorp family as we work together to realize the promise of this unique and powerful combination.”
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