Takeda Goes Virtual, Splitting Non-oncology Development Between Covance And Quintiles

TOKYO - Takeda Pharmaceuticals has teamed with contract research organizations Covance and Quintiles to move toward a "fully virtual outsourcing model," the company announced Feb. 15.

Following in the footsteps of Eli Lilly, Sanofi-Aventis and Eisai, Takeda will enter strategic partnerships with Covance and Quintiles for its large, global development programs, with the exception of its oncology development.

"These partnerships will make Takeda one of the top clients on [the CROs'] list," Takeda Invest Relations Director Seizo Masuda said.

Takeda will consolidate a number of development activities that it has outsourced to several vendors, Masuda said, and it will have access to both the clinical development capabilities and the central laboratory services of the two CROs. Covance and Quintiles will provide clinical development services for Phase III and Phase IV studies along with large Phase II studies for Takeda. While programs will typically be supported by either Covance or Quintiles, individual programs may be supported by both companies depending on the size and complexity of the program.

As a result of standardizing its outsourced development, the company will yield significant cost savings and will be able to work more efficiently for late-stage compounds, Masuda said.

"Rather than making tactical study-, region- and function-specific vendor decisions, Takeda will engage with Covance and Quintiles to strategically plan globally across projects and functions," a Takeda spokesperson said in an email to PharmAsia News.

The company declined to comment on any of the financial details of the partnerships.

Takeda Global Development Operations Senior VP Robert Ahlbrandt said in a press statement that the company is trying to grow its global drug development footprint, "especially in Asia." But it is unclear what responsibilities Takeda will relinquish to the CROs in Asia. Masuda said Japan-exclusive programs are not included in the CRO partnership, nor are pan-Asian development programs. The majority of programs under the new partnerships will be used for filings in the U.S. and EU, but will also include Asia and Japan-based activities associated with global studies.

The company said the Covance and Quintiles partnerships will be utilized across therapeutic areas save for oncology.

Takeda acquired a fully integrated oncology infrastructure with its May 2008 acquisition of Millennium Pharmaceutical. In an April 2010 presentation, Millennium Chief Medical Officer Nancy Simonian noted that Millenium went from being responsible for four molecules to 14 when Takeda's oncology pipeline was integrated into Millennium. Simonian said the company went through a "portfolio prioritization process" to distribute resources accordingly. Millennium, now called Millenium: The Takeda Oncology Company, focused its resources on innovation and will outsource other research activities.

Trending To Large CRO Deals

The near-term impact on the CROs will likely be minimal, and Takeda said it does not expect the partnerships to affect the company's current pipeline. "Takeda will engage Covance and Quintiles earlier in the clinical development process to enable input on study design and operational strategy," a spokesperson said.

Covance has now ramped up the scale of services it provides for three clients in less than two years. The company signed a deal with Lilly in 2008 and Sanofi in 2010. Both of the previous deals greatly increased the amount of work for Covance. Lilly signed a 10-year service deal worth at least $1.6 billion, and Sanofi signed on for 10 years as well, for which Covance expects to generate at least $1.2 billion. The CRO will be the sole provider of central laboratory services for Sanofi, more than doubling the amount of work it had been doing for the company (Also see "Sanofi Makes Good On Outsourcing Promise In Deal With Covance" - Pink Sheet, 30 Sep, 2010.).

In comparison to Covance's large partnerships, Quintiles entered a more integrative collaboration with Eisai. Quintiles took on some of the development costs for 11 trials designed for six Eisai oncology compounds in return for success-based milestone payments (Also see "Quintiles And Eisai Collaborate To Develop Cancer Compounds" - Scrip, 2 Nov, 2009.).

Takeda said the partnerships with Covance and Quintiles will allow for the use of risk-sharing or outcome-based contracting, which requires the CROs to take on more accountability for trial results.

Baird analyst Eric Coldwell viewed the Takeda announcement as a continuation of a large pharma trend to "shift fixed R&D costs to variable through outsourcing," particularly in late-stage development.

Covance's large-profile deals with Lilly, Covance and now Takeda are extremely encouraging to Covance, its investors, and the CRO industry. For one thing, adding on new deals affirms Covance's decision to pursue the Lilly deal, the scale of which had turned heads. "When the Lilly deal was struck, there were a lot of people laughing in the industry. Covance has stepped too far," Covance Chairman Joe Herring said Jan. 26 during the company's Q4 call.

But the Lilly deal did not crash-and-burn. In fact, companies now approach Covance trying to find out as much as they can about the Lilly and Sanofi deals, and the deal structure is catching on with pharma competitors.

"I think it is going to be an easy year to 18 months, not necessarily Covance, but just across the [CRO] industry," Herring said.

- Daniel Poppy ([email protected])