That was one very short partnership.
China-based WuXi PharmaTech
When the deal was announced last June, I really didn't think it made much sense for WuXi. Sure, Covance is considerably larger, and gaining access to its clients and expertise might have helped WuXi in the short term. But WuXi seems to be attracting more and more clients on its own, so I wasn't sure how giving up 50% of the profits would have helped the Chinese company in the long run.
The companies didn't give a reason for their split. There must not be too many hard feelings from the divorce, though, because in their separate press releases, the companies didn't have anything bad to say about each other (or the deal). It's possible they had different plans for how quickly they'd roll out the services. Perhaps Covance was a little preoccupied with its deal with Eli Lilly
Whatever the reason, it doesn't mean I like them any less. In fact, I'm really bullish on pharma outsourcing companies in general. From ICON
As long as outsourcing companies can do the work for less, such companies should be able to prosper even in times of fear. And I'm just fine with that.
Let us know what you think in Motley Fool CAPS. Make an out- or underperform call on these companies; post a pitch about how you think the breakup will affect WuXi and Covance. It's free. It's fun. And it's Foolish!
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. inVentiv Health is a Motley Fool Hidden Gems pick. Eli Lilly is an Income Investor recommendation. The Fool has a disclosure policy.
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