PPD acquires Merck’s 130,000 square-foot vaccine lab

PPD Inc. recently entered a strategic collaboration with Merck & Co. Inc. whereby it acquired the latter’s vaccine testing lab in Wayne, Pa.

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WILMINGTON, N.C.—PPD Inc. recently entered a strategic collaboration with Merck & Co. Inc. whereby it acquired the latter's vaccine testing lab in Wayne, Pa. The agreement also calls for PPD to hire about 80 Merck employees who operate the 130,000 square-foot vaccine testing laboratory and provide Merck with assay development and immunogenicity testing services to support Merck's vaccine portfolio over a period of five years.

The agreement significantly expands the existing central laboratory service relationship between the two companies, with PPD providing traditional central laboratory and sample storage services to Merck for its clinical development activities.

Financial details of the agreement, which closed Dec. 31, were not disclosed, but comparing the acquisition, which is said to be a state-of-the-art facility, to the cost of new lab construction provides some measure of the value that has changed hands. According to figures compiled by Ted Hammer, an analyst at HLW International LLP in New York, biomedical lab construction costs in 2008 averaged from $480-$510 per square foot, putting the cost of a new lab the size of the one PPD has purchased at approximately $62 to $66 million.

Agostino L. Fede, senior vice president of PPD and head of global central labs, declined to discuss the company's strategy behind the acquisition, but did note PPD is perhaps the first CRO to have a central lab that offers a comprehensive menu of assay development and testing services for vaccine clinical trials. "Our intent," he states, "is to use novel partnership approaches to solve the productivity dilemma, much as the recent example of Eli Lilly and Covance."

Fede expects an easy fit from the science and operational perspectives. Administrative processes will be merged, he adds. There will be some change in the specimen flow to vaccine and biologics labs for immunogenicity testing, but "the science aspect will be fundamentally untouched," he says.

In addition to its expanded services to Merck, the acquisition of the facility will provide the opportunity for PPD to expand its services to all of its clients, "adding world-class vaccine and biologic testing, assay development and sample storage capabilities to its current suite of laboratory services," Fede notes. "All of our clients will benefit immediately from the 10 years experience of our new facility and staff. It's a strategic relationship that is a win for Merck, for us and for our other clients."

PPD has also established a cGMP analytical testing laboratory in Athlone, Ireland. The facility is expected to begin operations sometime during the second half of 2009. According to the company, the facility will meet growing demand for testing of clinical programs across the spectrum of drug development in Europe, the Middle East and Africa. DDN

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