In a move aimed at delivering new medicines to market more quickly and cheaply, Eli Lilly & Co. struck a $1.6 billion deal with drug-development service company Covance Inc., which will buy one of Lilly's research-and-development facilities for $50 million as part of the agreement.
Lilly hopes Covance's expertise in conducting drug trials will shave months off the Indianapolis drug maker's early-stage product-development timeline, which could help it make faster decisions about whether to kill a compound or prioritize its development.
More at the WSJ
The Covance-Lilly deal comes after a similar move in late 2007 by Amgen Inc, which farmed out its clinical field staff to the privately held contract research organization CRO Quintiles.
As large drug makers seek to cut costs in the face of patent expirations for top selling medicines, they are increasingly farming out clinical testing to CROs like Covance.
CROs have seen their shares rise this year against an overall downward trend in health care, and analysts expect larger, more diversified research companies to benefit the most from drug maker's troubles.
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