Lilly Selling R&D Center To Contract Researcher
8 CommentsBy Ed Silverman // August 6th, 2008 // 10:23 am
This is all about lowering R&D costs. So here’s the deal: Lilly will sell its Greenfield Laboratories site in Indiana and transfer operations to Covance, a big contract research organization, for an up-front payment of $50 million, and the two companies are also signing a 10-year service agreement worth about $1.6 billion.
As a result, Covance will assume responsibility for Lilly’s toxicology testing and other R&D support activities at the 460-acre site. The deal builds on an existing agreement in which Covance already conducts pre-clinical toxicology, early-stage clinical work and Phase II and III trial support. About 260 Lilly 260 jobs will shift to Covance and another 225 will be shifted to other Lilly sites in the state.
This “represents an innovative approach to the research and development productivity challenges our pharmaceutical clients are facing,” Joe Herring, Covance’s chairman and ceo, says in a statement .
In a related move, Lilly is transferring clinical trial monitoring work in the United States and Puerto Rico to Quintiles, the pharma services company, and most of its data management work in the US to i3, another contract research organization. About half of the 265 Lilly jobs affected will be lost.
Anne
So when something goes wrong with a drug in this partnership, who will be blamed - Lilly, Covance, or both?
Dan
CRO sites have been selected by Lilly’s sales team in the past. That in itself suggests a problem. That apparently occured with Zyprexa.
Vicarious liability.
Dan
On the surface this sounds like a winning deal for Lilly, but the saying “you get what you pay for” is is not a myth. Lilly is doing similar deals with companies like Hospira, which apparently makes some of their biotechnology meds like insulin, and while these deals help in the short-term, one does have to wonder what the long-term impact will be? Will Lilly be nothing more than a brand-name? The evidence seems to suggest that will be the case!
Dan
It’s under the respondeant superior doctorine. It’s just something you would have to look up for a complete understanding.
it’s a Latin thing, but Lilly is responsible.
Jeffrey Clark, CEO of Beaker.com - The Online Community for Life Sciences Professionals
If there is one industry winner with all the recent layoffs, it may be the larger CRO’s like Covance, Quintiles, PPD, etc. Even though their fate rests with the industry, companies want to be smaller & more efficient. CRO’s offer them that opportunity.
It will be interesting to watch through the remainder of 2008 how these large CRO’s perform in the market in comparison to their clients.
Salmon
This has been coming for a while.
Lilly and other companies are on the science board at NIH, and NIH has a new program to help academic scientists do early phase I development science which Big Pharma will then get to cherry pick the best drugs for future development without the financial investment and risk of selecting a 100 novel mechanisms to find the one that a) works and b) isn’t excessively toxic.
As for the potential for these contract companies all you have to do is look at the smart monery. Notice that the CEO of PPD (Ketek-hepatotoxicity contract study)is Mario L. Rocci, Jr., Ph.D. the Ex-CEO of Glaxo who is responsible for drugs such profitable Psych drugs such as Paxil (depression- suicides and cardiac toxicity), lamotrigine (bipolar disorder - Stevens Johnson Syndrome and Congenital brain damage), and ex-CEO of Alza who’s also responsible for Concerta (ADHD-Cardiac toxicity etc). Plus the multibillion dollar sale of Alza to J&J and the revamping of the entire ADHD market which is a feeder to the pediatric bipolar market for antipsychotics such as Zyprexa (Lilly) and Risperal and Invega (J&J).
Now if they could just figure out how to make these antipsychotics and seizure drugs that are then used for bipolar cause serious toxicities with long term use that would have to be paid for by Medicaid and Medicare they would have an even bigger guarenteed market and profitability for the future. Who cares if results in M/M & SS becoming 30% of GDP and destroys the US economy. They’ll just move to selling even more drugs to the huge middle classes in India and China.
Salmon
Salmon
In case anybody is wondering, everything I say about drugs is based on information I’ve learned from publicly available documents. I use no inside information.
Salmon
Bubba
Doh!