Labcorp launches independent clinical development business

USA — Laboratory Corporation of America Holdings (Labcorp), a global life sciences company, has announced the formation of Fortrea, a spin-off of its clinical development business.

Prominent blue-chip companies that have recently spun off include General Electric Company, Johnson & Johnson, and 3M Company.

Fortrea will operate as an independent, publicly traded Contract Research Organization (CRO), providing comprehensive drug and medical device development services to pharmaceutical and biotechnology organizations worldwide.

The company aims to employ over 19,000 people and will offer Phase I through IV clinical trial management and commercialization solutions.

Fortrea’s main objective will be to help customers drive innovation and advance next-generation therapies for patients globally.

The spin-off is expected to be completed in mid-2023 and will result in two independent, publicly traded companies.

Labcorp will become a global healthcare and life sciences company comprising Labcorp’s Diagnostics, central labs, and early development research labs businesses.

On the other hand, Fortrea will become a global CRO providing Phase I-IV clinical trial management, market access, and technology solutions.

Recent spinoffs include GE HealthCare, which is now trading as an independent company on Nasdaq; 3M’s healthcare business, which will focus on wound and oral care, healthcare IT, and biopharma filtration.

Other prominent blue-chip companies that recently spun off include GSK plc’s consumer health division, Haleon plc, becoming the largest independent consumer health company globally; Zimmer Biomet Holdings’ spinoff of ZimVie Inc., and Becton, Dickinson and Company’s spinoff of Embecta Corp., which is now one of the biggest pure-play diabetes management companies in the world.

Tom Pike, CEO of Labcorp’s Clinical Development business, and future CEO and chairman of the board of Fortrea said, “The announcement of Fortrea signals to the world what we are building: a leading, pure-play CRO positioned to serve customers, deliver life-changing medicines faster, and create lasting value for all our stakeholders.”

Meanwhile, Amy Summy, executive vice president and chief marketing officer of Labcorp, added that “the Fortrea name represents innovation and agility, improving the trial process, and delivering life-changing solutions faster.”

The company said that its full executive management team, board of directors, and stock symbol will be announced in the coming months.

In other news, Labcorp has agreed to pay US$19 million to settle allegations of violating the False Claims Act.

The accusations were that Labcorp submitted false claims to Medicare as a result of providing phlebotomy services to patients whose healthcare providers ordered laboratory testing from Labcorp, Health Diagnostic Laboratory, and Singulex, while HDL and Singulex were allegedly paying healthcare providers for referrals.

Scarlett Lutz and Kayla Webster filed a lawsuit under the False Claims Act’s qui tam provisions, which allows private parties to file actions on behalf of the government, and as part of the settlement, they will receive around US$5.6 million.

Although the claims have been resolved, there has been no determination of liability.

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