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Quintiles, Quest Form Global Lab Services Joint Venture

NEW YORK (GenomeWeb) – Quintiles and Quest Diagnostics announced they would combine the clinical trials lab operations from the two firms, forming a global joint venture.

According to the partners, their joint venture is poised to be the second largest central laboratory services firm in the world, which would have generated $575 million in revenues last year. Quintiles is considered to be the largest contract research organization in the world for drug development, while Quest competes with Laboratory Corporation of America as one of the largest lab testing services firms in the US.

Under the terms of the deal, slated to close in the third quarter, Quintiles will own 60 percent of the joint lab services business, and Quest will own 40 percent.

Between Quest and Quintiles, they employ 3,500 medical doctors, PhDs, and biostatisticians, as well as experts in genomics and precision medicine. The joint lab services business will have access to Quintiles' Infosario technology platform and Quest's data analytics capabilities, the partners noted, and both have experience providing lab services to drug companies.

Quest draws its expertise from 20 billion test results, while Quintiles has electronic health records containing 60 million patient lives and 250,000 clinical investigators.

Quintiles and Quest will appoint a global management team to lead the lab services business. The joint venture will have its own board, which will allow it to "function as a company that goes out and competes in the marketplace independently," Quintiles CEO Tom Pike said during a call today with investors.

As a result of this deal, Quintiles will also be using Quest more for its send-out clinical testing needs, Pike noted, which will further add to Quest's revenues.

The firms stated that the new entity will provide customers with "advanced testing capabilities and services," using, for example, gene expression analysis and next-generation sequencing. The JV also will offer expertise in the development of companion diagnostics for precision drugs, including regulatory, reimbursement, and commercialization strategies.

The Quintiles/Quest deal follows the recent completion of LabCorp's $6.2 billion acquisition of contract research organization Covance, through which LabCorp is also hoping to expand its companion diagnostics business and provide lab services for new therapeutic opportunities.

Pointing out that nine out of the 41 novel drugs approved by the US Food and Drug Administration last year have biomarkers associated with them, which may be called precision treatments, Pike observed that the testing performed as part of drug development programs is becoming increasingly complicated.

"Now when we do laboratory services, it's not just simple lipid panels and basic tests associated with various organs to understand safety," he noted. "Now, we're often trying to establish a high-quality assay that lets us pursue a biomarker that really drives the approval of the drug." At the same time, he added, "there are also basic tests that get done and those basic tests still need to be done as efficiently as possible."  

Quest CEO Steve Rusckowski highlighted during the call that the FDA has so far approved 20 companion diagnostics. "Already in Quest … we have about 40 potential [companion diagnostics] opportunities," he said, adding that his firm provides most of the testing associated with the 115 marketed drugs with a biomarker in their labeling.

Additionally, the joint venture "will help enhance quality and efficiency by leveraging Quest Diagnostics' supply chain that serves approximately half of the physicians and hospitals in the US and includes 2,200 service centers, 3,000 couriers, and connectivity solutions used by 250,000 healthcare providers," the companies said in a statement.

Quintiles and Quest also expect to collaborate on new patient recruitment and retention strategies for clinical trials; on expediting the validation, development, and market access of companion tests; improving support services for late-phase studies; and advancing analytics and tools to assess population health.

The companies didn't disclose the financial terms of their deal.