In October 2010, Sanofi and the CRO Covance finalized a 10-year, $2 billion R&D alliance, which included an asset and staff
transfer of two R&D facilities and approximately 300 associated scientific and technical staff. Under the agreement, Sanofi
sold its Porcheville, France, and Alnwick, United Kingdom, sites and facilities to Covance for approximately $25 million.
Under the agreements, Sanofi is using Covance's global R&D portfolio of discovery support, toxicology, chemistry, clinical
Phase I–IV, central-laboratory, and market-access services with annual commitments for these services increasing over the
next decade. These agreements included a 10-year sole-source relationship for central-laboratory services. Covance gained
chemistry, manufacturing, and controls (CMC) services with the addition of the Porcheville and Alnwick sites, including preformulation,
drug formulation, preclinical, early-stage clinical API manufacturing, and radiolabeled chemistry. When announced in 2010,
Covance expected the alliance to generate revenues between $1.2 billion and $2.2 billion.
. Covance's partnership with Sanofi followed another long-term, high-value partnership with Eli Lilly. In August 2008, Eli
Lilly and Covance entered into a long-term strategic alliance in which Covance acquired Eli Lilly's preclinical research facility
in Greenfield, Indiana, for $50 million. As part of the agreement, Covance hired 264 former Eli Lilly employees, and Eli Lilly
committed to providing $1.6 billion in work to Covance over 10 years for a broad range of drug-development services. Covance
also assumed responsibility for all of Lilly's toxicology testing and discovery support activities at Greenfield.
Eli Lilly has further used the preferred-provider model in its clinical-trial-materials supply activities. In March 2010,
Thermo Fisher Scientific expanded its clinical-trial material supply relationship with Eli Lilly as part of a new, five-year
agreement. Under the agreement, Fisher Clinical Services, a business of Thermo Fisher, took over responsibility for Eli Lilly's
in-house clinical-trial-materials manufacturing, packaging, and labeling operations onsite at the Lilly Technology Center
North in Indianapolis, Indiana. Fisher Clinical Services also is handling the distribution of clinical-trial materials for
Eli Lilly throughout North America. The agreement included Fisher Clinical Services' purchase of Lilly's clinical-trial manufacturing
and packaging equipment. This relationship was expanded to support Lilly's new operating model, which is designed to speed
drug development while reducing fixed costs.
Eli Lilly adopted a preferred-provider approach in API manufacturing as well. In January 2010, Eli Lilly finalized the sale
of its Tippecanoe Laboratories API manufacturing facility in Lafayette, Indiana, to Evonik Industries in a deal first announced
in 2009. The facility produces APIs, fine chemicals, and animal-health products. In connection with the sale of the site,
the two companies entered into a nine-year supply and services agreement, whereby Evonik will manufacture final APIs and intermediates
for certain Eli Lilly human and animal-health products. The sale of Tippecanoe Laboratories was the culmination of Lilly's
strategic review of the site that was announced in July 2008. The decision to sell the site was based upon a projected decline
in utilization of the site due to several factors, including upcoming patent expirations on certain medicines made at the
site, Lilly's strategic decision to purchase, rather than manufacture, many late-stage chemical intermediates, and the evolution
of the Lilly pipeline toward more biotechnology medicines.
Two preferred-provider relationships from GlaxoSmithKline (GSK) involve manufacturing with the CMO Lonza and R&D with the
CDMO Aptuit. On the manufacturing side, GSK partnered with Lonza in September 2010 for securing capacity and expertise in
biological manufacturing by which Lonza is supplying manufacturing capacity for five early-stage monoclonal antibodies of
Under the terms of the agreement, Lonza will initially manufacture clinical-trial batches of five compounds currently in Phase
I and II for GSK. Lonza also will provide access to flexible capacity to enable GSK to respond to future demand dependent
upon progression of the molecules through late-stage development and commercial launch. As part of the agreement, GSK will
work with Lonza to assess options for the design, specification, location, and construction of a biopharmaceutical manufacturing
facility within the UK.
On the R&D side, in July 2010, GSK and Aptuit finalized an agreement under which Aptuit acquired operations at GSK's Medicines
Research Center in Verona, Italy, for supplying R&D services to GSK. Aptuit gained the scientific expertise and knowledge
of approximately 500 staff at the research center through the transfer of the facility. The agreement allows Aptuit to combine
its expertise with the Verona Medicines Research Center's expertise in drug discovery, lead optimization, API development
and manufacturing, and preclinical and clinical drug development.