NEW YORK (AP) -- Drug development services company Covance Inc. said Thursday it entered a partnership with Sanofi-Aventis SA, one of the world's biggest drug companies, that could be worth as much as $2.2 billion over the next 10 years.
Covance said it will provide drug development services to the Paris-based company, and receive an estimated $1.2 billion to $2.2 billion in payments. As part of the deal, Covance will buy Sanofi-Aventis facilities in Porcheville, France, and Alnwick, U.K., for about $25 million. It will operate those facilities for at least five years.
Shares of Covance jumped $4.63, or 11 percent, to $46.81 in afternoon trading.
Covance said Sanofi-Aventis will use its services for drug discovery support, toxicology, chemistry, clinical testing, central laboratory, and market access services. The deal for the two facilities gives Covance the ability to offer chemistry, manufacturing, and controls services, which can include drug formulation and ingredient manufacturing.
The Princeton, N.J., company said the deal is expected to close by the end of 2010. Covance reported $1.87 billion in net revenue in 2009.
In a note to clients, Jefferies & Co. analyst David Windley said Covance was already doing about $35 million in annual business with Sanofi-Aventis. He said that amount will increase slowly over the next few years, and Covance will be the sole provider of central lab services for Sanofi-Aventis. Windley estimated the deal includes $1.3 billion in revenue from late-stage clinical testing and $900 million in revenue from earlier phases.
