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French drugs maker Sanofi-Aventis (SNY) has chosen New Jersey-based contract research company Covance Inc. (CVD) as a partner for research and development in a 10-year in a deal that could be worth up to $2.2 billion.
Under the deal, Covance will provide R&D for Sanofi in the fields of toxicology, chemistry and clinical phase I through phase IV trials. Payments will range from around $1.2 billion to $2.2 billion, Covance said in a statement.
Sanofi is also selling its R&D sites in Porcheville, France and Alnwick in the U.K. to Covance for $25 million, Covance said Thursday.
The move will save "hundreds" of jobs, Sanofi research and development executive vice president Marc Cluzel said in the statement. Covance said it will "maintain employment" on the sites for at least the next five years.
Under the leadership of Chief Executive Chris Viehbacher, Sanofi has significantly cut back on internal R&D projects. Viehbacher has favored forging alliances and licensing deals with drug developers to fill out Sanofi's pipeline of new products. He has said it is difficult for a company as large as Sanofi to make efficient use of R&D resources internally.
Such moves are common in the industry which is increasingly turning to forming partnerships with peers or contract research organizations, or CROs for developing new drugs. Peers Eli Lilly & Co (LLY) and GlaxoSmithKline PLC (GSK) are among drugs companies who use services provided by CROs.
Covance's competitors include Quintiles Transnational Corp. (QTRN), Parexel International Corp. (PRXL) and PPD Inc.
The sale of Sanofi research sites to Covance is expected to be completed before the end of the year, Covance said.
At 0953 GMT, Sanofi shares traded down 1.2% at EUR48.87, just below the French CAC-40 index, which traded down 0.7%.
By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 1773; email@example.com