Quest Diagnostics and Quintiles have joined forces to create a clinical trials laboratory services arm with a global reach. The New Jersey-based Quest, the nation’s largest national laboratory, and the North Carolina-based Quintiles, one of the world’s largest drug development firms, said they would leverage the former’s 20 billion test results, and the latter’s electronic health records for some 60 million lives and a network of 250,000 clinical investigators. The venture will have some 3,500 physicians, doctorates and biostatisticians on staff, officials said. It will be managed by executives from both Quest and Quintiles. The decision by Quest to team with Quintiles comes just a few months after its primary rival, LabCorp, moved to acquire pharmaceutical firm Covance in a deal worth nearly $6 billion. That transaction is expected to push LabCorp in front of Quest in terms of total annual revenue. “We view this arrangement as a capital-efficient means of duplicating some of the strategic merits behind the LabCorp/Covance combination, although clearly a joint venture structure is less direct than an outright acquisition,” said Ross Muken and Michael Cherny, analysts with EverCore ISI, in a recent report. “So both companies must ensure that goals are fully aligned in order […]
Quest Diagnostics and Quintiles have joined forces to create a clinical trials laboratory services arm with a global reach.
The New Jersey-based Quest, the nation’s largest national laboratory, and the North Carolina-based Quintiles, one of the world’s largest drug development firms, said they would leverage the former’s 20 billion test results, and the latter’s electronic health records for some 60 million lives and a network of 250,000 clinical investigators. The venture will have some 3,500 physicians, doctorates and biostatisticians on staff, officials said. It will be managed by executives from both Quest and Quintiles.
The decision by Quest to team with Quintiles comes just a few months after its primary rival, LabCorp, moved to acquire pharmaceutical firm Covance in a deal worth nearly $6 billion. That transaction is expected to push LabCorp in front of Quest in terms of total annual revenue.
“We view this arrangement as a capital-efficient means of duplicating some of the strategic merits behind the LabCorp/Covance combination, although clearly a joint venture structure is less direct than an outright acquisition,” said Ross Muken and Michael Cherny, analysts with EverCore ISI, in a recent report. “So both companies must ensure that goals are fully aligned in order to achieve maximum results.”
Quintiles will own 60 percent of the joint venture, with Quest owning the remaining 40 percent. The joint venture deal is expected to be closed by the third quarter of this year.
Although the financial details of the joint venture were not disclosed, the companies said the combined revenue from the business would be about $575 million per year—about 5 percent of the companies’ overall revenues.
“It will join together the scale, expertise and end-to-end capabilities of the broader Quintiles and Quest Diagnostics organizations with a laser-like focus on providing world-class laboratory ser- vices that will help improve customers’ probability of success,” said Quintiles Chief Executive Officer Tom Pike in a press release.
Takeaway: Quest and Quintiles are trying to expand their capabilities in clinical trials by combining their existing resources.
