PPD and Merck in Strategic Outsourcing Deal

Tuesday, January 6, 2009 11:25 AM

Contract research organization (CRO) PPD has entered into a strategic collaboration with Merck that will significantly expand PPD’s global central laboratory business.

Under the terms of the agreement, PPD assumes control of Merck’s 130,000-square-foot vaccine testing laboratory and related equipment in Wayne, Pa., as well as 80 Merck employees who operate the facility.

PPD will provide a range of assay development and immunogenicity testing services as well as traditional central laboratory and sample storage services to Merck over the next five years.

“With this acquisition, we believe we are the first CRO to have a central lab that offers a comprehensive menu of assay development and testing services for vaccine clinical trials,” said Agostino Fede, senior vice president of PPD and head of global central labs, in a company release.

The PPD-Merck agreement is just the latest example of the growing trend toward strategic outsourcing agreements between CROs and big pharma. In August, Covance and Eli Lilly signed a $1.6-billion agreement to sell a major R&D facility to Covance. Lilly also cut smaller outsourcing agreements with Quintiles and i3 Statprobe in 2008.

PPD did not disclose financial details of the transaction. PPD’s shares were down 2.04% to $28.40 at end of day Monday.

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