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Covance picks up Merck lab
September 2009
by David Hutton  |  Email the author
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PRINCETON, N.J.Covance announced it has entered into a definitive agreement with Merck & Co. Inc. under which Covance will acquire Merck's Seattle-based Gene Expression Laboratory, and Merck will in turn buy genomic analysis services from Covance.  
 
Under the terms of the agreement, Merck has committed to a five-year $145 million contract to purchase genomic analysis services from Covance. In addition, Covance will acquire Merck's Seattle-based Gene Expression Laboratory that performs genomics services such as genotyping, gene sequencing and gene expression profiling. The division is part of Merck's Rosetta Inpharmatics group, a 300-person unit that is in the process of being dismantled. In June, Microsoft purchased the assets of Rosetta Biosoftware, and said it planned to keep some employees on board.  
 
Based in Princeton, N.J., Covance is a drug development services firm that has operations in 25 countries, and more than 10,000 employees worldwide.  
 
According to Joe Herring, chairman and chief executive officer of Covance, the acquisition of the laboratory brings world-class talent and technologies to Covance and further expands our capabilities in genomics testing and personalized medicine.
 
"We recognized the need to expand our footprint in the important and growing genomics testing market, and this transaction provided both a superior and quicker entry point than the build or buy options we considered," he says. "The overall size of the genomics market is estimated at several hundred million dollars per year, including services for discovery/preclinical and clinical trials support."
 
According to Tom Turi, vice president for biomarkers at Covance, Rosetta Inpharmatics has a well-established reputation as a leading provider and developer of genomics applications and technology, making it an attractive acquisition.
 
"The depth of scientific talent, leading-edge technologies and unparalleled capabilities from this organization provides Covance with a superior entry point in genomics segment," he says.  
 
According to Deborah Tanner, corporate senior vice president of central laboratory services at Covance, the acquisition "establishes Covance as the largest genomics service provider in the world."
 
"This agreement will broaden our participation in projects and partnerships with clients in the drug discovery process," she says.  
 
The companies closed the deal on Aug. 17. Covance assumed control of the facility and the Seattle team has joined Covance. Covance said it expects to offer employment to the majority of its current employees.
 
The sale could breathe life into the facility, Herring says.  
 
"This is a new day for Rosetta. We plan to invest in it, and grow it," says Herring. Turi adds that the laboratory will fit well with Covance's mission to expand its testing capabilities.
 
"Covance has long recognized the need to expand our testing capabilities to support our clients' discovery efforts and the development of personalized medicine," he says. "Our landmark deal with Lilly last summer included the acquisition of discovery support capabilities and this recent addition further expands our footprint in discovery services, specifically in the biomarker discovery platform and extends our genomic capabilities in support of clinical development."  
 
According to Dr. Rupert Vessey, vice president of Merck Research Laboratories, the Gene Expression Laboratory proved to be an attractive opportunity because it has established a reputation for consistent delivery of high-quality experimental data in support of Merck's external collaborations and internal research projects.
 
"This agreement assures continued access to these services for our researchers while securing a future for the facility as an integral part of a world leading drug development service provider," Vessey notes.  
 
Merck will start off as a key client of the laboratory's services, notes Turi. "Covance will provide complete genomics services such as gene expression analysis, DNA variation analysis, including next-generation sequencing and genome-wide variation detection capabilities," he says. "This acquisition provides a unique opportunity to enhance our relationship with Merck at a more strategic level through this five-year genomics partnership. We also hope to be providing these services to our other clients in the long-term."
 
Code: E090918

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