Labcorp to acquire Covance for $5.6 bn

Laboratory Corporation of America Holdings (LabCorp) has entered into a definitive agreement to acquire Covance Inc for $5.6 billion. The combination will create the world’s leading healthcare diagnostics company, capitalising on LabCorp’s industry leadership in medical testing and Covance’s leadership in contract research.
 
LabCorp provides leading-edge medical laboratory testing and services through a national network of primary clinical laboratories and specialty testing laboratories. Covance is the world’s most comprehensive drug development company and a leader in nutritional analysis. Together, the combined company will be the leading provider of medical testing as well as the premier full-service drug development organisation partnering with customers across a broad continuum from biopharmaceutical research to drug and diagnostic development to commercialisation.
 
The combined company will leverage technologies that improve patient recruitment for clinical trials, enhance efficiency in the conduct of clinical trials, and deliver data faster to drug sponsors, physicians, and patients.  The combined company’s range of innovative offerings will advance personalised medicine, improve the development of therapeutics, and enable its pharmaceutical customers to revolutionize drug commercialisation. Additionally, the combined company will leverage the increased scale of its central laboratory operations and collective data resources to drive greater R&D productivity for its clients.
 
The combination of LabCorp and Covance will create new sources of revenue and broaden the company’s customer base. Revenue of the combined companies will be derived from managed care (32%), pharmaceutical and biotech companies (29%), commercial customers (22%), Medicare/Medicaid (12%), and private patients (5%).
  
David King, Chairman and Chief Executive Officer, LabCorp, commented, “This transaction provides LabCorp with immediate scale and a comprehensive market-leading platform in the $141 billion biopharmaceutical research & development market, while at the same time achieving the new sources of revenue, broader payor mix, and greater international presence we have long pursued. Covance also has market access and nutritional businesses that we view as great growth opportunities.”