The new 13,000 sq feet new central laboratory, located in Shanghai, will be up and running to support clinical trials by the end of the year.
This move comes as no surprise since China recently topped a list of the most attractive low-cost global locations to run clinical trials outside the US.
Clinical trials now account for two thirds of the development cost for new drugs and offshoring to locations outside the US, and in particular China, is becoming a common way to help pharma firms keep costs down by providing access to a new range of patients, aiding recruitment.
According to a report from consulting firm A.T. Kearney, China was chosen because it has the largest urban patient population in the world - providing a vast patient pool - in addition to a huge network of hospitals with over 2.5m doctors, nurses and technicians, all on significantly lower salaries than their western counterparts.
"All of our major clients are conducting clinical trials in China and the demand is growing," Deborah Tanner, president of Covance Central Laboratory Services, told Outsourcing-Pharma.com.
"We made the decision to build a central laboratory in China to support our clients' global drug development needs in the Asia-Pacific region."
She also cited the good talent pool of qualified scientists and medical technologists as a drive to this move.
With this new central lab, Covance also expects to expand its clinical trial services in China, as it is also about to relocate its existing clinical development office in Beijing because it outgrew the former location.
"The revenue for this region is small in comparison to North America and Europe, but it's growing," said Tanner.
"We have several large clinical trials in the final stages of bidding that have a China component."
In addition, she said, Covance will be transitioning some of its current projects from its partner lab in Shanghai to the new central laboratory.
Tanner also clarified that Covance does not have any current plans to open a laboratory in India, despite the region becoming another hub for the outsourcing of clinical trials.
"We have been servicing India from our Singapore laboratory for over five years and that has been working well," she explained.
"Although it sounds counterintuitive, sometimes in-country logistics can be more complex and costly than sending the samples to Singapore."
The Shanghai facility brings to five the number of central laboratories that Covance owns globally. The company already has central labs in the US, Singapore, Sydney, and Geneva.
Covance's central laboratories all use the same technical platforms, methods and procedures as the company claims this is to ensure the same level of quality laboratory data regardless of the location.
In fourth quarter results announced today, Covance's late-stage development segment - which includes central lab and Phase II-III clinical services - grew modestly due to slower enrolment in large Phase III clinical trials.
However, operating income for this area of the business increased almost 18 per cent, largely driven by clinical development and central laboratory services, and the company said it expects this strong performance to continue over the coming year.
Meanwhile, the company has announced the relocation and expansion of its Texas clinical research unit in order to centralise its operations in the region.
"Our new clinic is truly a top tier research facility," said Rafael Cajigas, site director.
"The move consolidates our early and late stage operations in one building, including study conduct, screening, and administration in a purpose-built facility."
The firm has also increased the square footage to 34,000 sq. ft. and expanded capacity to 60 beds, and the new space is large enough for significant expansion to meet demand, said Cajigas.
The research team at the Austin facility conducts Phase I studies such as first-in-human and cardiac safety (QTC), and studies requiring special populations such as the renally impaired.
The staff is also experienced with studies of drugs in later stages of development for diabetes, hepatitis, hypertension, obesity, high cholesterol, osteoporosis, arthritis, and gastrointestinal indications.
Covance conducts clinical trials at the Austin clinic and ten other clinical research units in the US and the UK.