The deal sees PPD take over the vaccine testing and assay development lab – including more than 80 Merck staff – and provide services to Merck in the areas of assay development and immunogenicity testing. Terms of the agreement have not been disclosed.
The agreement is reminiscent of Eli Lilly’s groundbreaking 10-year, $1.6bn agreement with Covance last year, which saw the drug major sell off its Greenfield Laboratories facility to Covance, including 260 staff, with the CRO providing toxicology, pharmacology and other R&D work to Lilly as a paid-for service.
This is a path that is already well-trodden in pharmaceutical manufacturing but less common in R&D. Faced with surplus capacity at facilities drugmakers are increasingly electing to sell off plants, to management buyout teams or contract service providers and often with legacy contracts thrown in, in order to reduce overheads.
Under the terms of the Merck/PPD deal, the CRO will provide central laboratory and sample storage services to Merck for its clinical development activities over a period of five years.
In a statement, PPD said the acquisition “significantly expands [our] overall global central laboratory business, adding world-class vaccine and biologic testing, assay development and sample storage capabilities to its current suite of laboratory services.”
The company also said it plans to invest in the lab by developing new technologies and assays to expand its immunochemistry and oncology vaccine testing services as well as biologics lab services for other biopharmaceutical clients.
PPD is one of the largest CROs in the sector, with a $5.1bn market cap that leaves it second only to Covance with a $6.1bn value. The company has seen some softening in its CRO business of late – marked by a slowdown in new business authorisations and a higher than usual cancellation rate – but has continued to invest for future growth.