LabCorp’s CRO business Covance will boost its nonclinical contract research services business as its parent company buys out the segment from Envigo, while the latter repositions.
On the flip side of this deal, Envigo’s Research Models Services business will buy up Covance’s Research Products business.
“This will result in Envigo becoming a pure-play research models and services business, while Covance will expand its global nonclinical drug development capabilities,” the groups said in a statement.
LabCorp will pay $485 million for the deal. By shedding the Covance Research Products unit, LabCorp said it aims to sharpen its focus on the nonclinical research business model side, all the while boosting its nonclinical capabilities, including respiratory, with scientific and technical expertise and industry insight added from Envigo.
The new Covance nonclinical research business will see staffers swell by about a third, up to around 4,200 employees across the globe, as well as add Envigo facilities in Europe and the U.S.
The deal also combines the research models and services units into a new business, remaining under the Envigo name, which will house around 1,200 workers.
“This unique transaction is part of our strategy to transform drug development, strengthening Covance’s ability to offer comprehensive global nonclinical research services to the biopharma industry,” said David King, chairman and CEO of LabCorp.
“Together, we are taking a creative and collaborative approach to early-stage research, which demonstrates LabCorp’s commitment to providing clients with innovative solutions that will ultimately improve health and improve lives," said King.
“This landmark agreement will provide an enhanced experience to our valued customers across both segments of our company and closely aligns with our vision to work together to build a healthier and safer world,” added Dr. Adrian Hardy, president and CEO of Envigo.
“We are excited to welcome the team members who will be joining our expanded research models and services entity and for our colleagues who will become important contributors to one of the world’s most innovative and respected contract research organizations. As a result of the multi-year strategic supply collaboration, we look forward to partnering with our colleagues at Covance to advance critical, life-enhancing research,” Hardy added.
Covance became part of medical testing giant LabCorp in a $6 billion deal back in 2015, and two years later, Envigo got onto the Nasdaq by merging with publicly traded Avista Healthcare Public Acquisition Corporation.
Envigo is itself the product of a merger between Huntingdon Life Sciences and Harlan Laboratories back in 2015, and has bases in the U.K. and New Jersey.