Covance Expands in Market Access - Analyst Blog
May 20 2014 - 5:40PM
Zacks
Major drug development services company Covance
Inc. (CVD), in a bid to expand its market access
offerings, acquired London-based value communication consultancy
Medaxial. Financial terms of the deal were not disclosed.
Medaxial offers an integrated approach to market access
strategy, health economic modeling and data dissemination services.
It also focuses on defining and communicating the value of a
biopharmaceutical product or medical device to healthcare payers
and stakeholders.
According to Covance, apart from complementing its offerings in
the rapidly growing sector of market access and reimbursement, the
acquisition will also enable the company to expand its footprint
worldwide. Notably, Covance currently has offices in Gaithersburg,
MD; Greenfield, IN; San Diego, CA and Sydney, Australia while
Medaxial's corporate headquarters is based in London with employees
in New York and Antwerp, Belgium.
We also expect this acquisition to revamp Covance’s market
access services growth rate which showed a modest decline in the
last reported quarter leading to drag in the overall late-stage
development performance.
In recent times, Covance is focusing on strategic international
expansion which it considers as a major growth driver. In the last
reported quarter, revenues from international operations (54% of
the total business) once again exceeded that from the U.S.
operations (46%).
Apart from the company’s recently established central laboratory
facility in Singapore, Covance also has central laboratories in
Indianapolis in the U.S.; Geneva in Switzerland; Shanghai in China
and Tokyo in Japan. The expansion of the Singapore facility
reflects ongoing focus and continued investment in the country. It
also underlines the strategy of business expansion in the Asia
Pacific region, especially the focus on high-growth countries like
China and Japan.
However, the capital spending environment and competitive
landscape remain as overhangs.
Zacks Rank
The stock presently carries a Zacks Rank #3 (Hold). Some of the
top-ranked medical services stocks worth a look are
Omnicare Inc. (OCR), BG Medicine,
Inc. (BGMD) and Quintiles Transnational Holdings
Inc. (Q), all with a Zacks Rank #2 (Buy).
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