The recent choice of a new CEO for ARUP Labs was of interest to me (see: ARUP Laboratories Announces New CEO). Below is an excerpt from the announcement:
ARUP Laboratories announced...that Edgar Braendle, MD, PhD, has been named CEO....Prior to joining ARUP, Braendle held multiple leadership roles at Novartis Pharmaceutical Corporation and Schering AG. Most recently, he was senior vice president and global head of Companion Diagnostics at Novartis....Dr. Braendle received his medical degree at RWTH Aachen University in Germany, followed by specialty training in medical oncology, urology, and pharmacology. As an associate professor at the University of Ulm, he led a research laboratory funded by the German Research Foundation and a phase-I clinical trial unit
ARUP is one of the most prestigious reference labs in the country so their choice of a CEO is important for the industry at large. I was interested in Dr. Braendle's resume because of his previous positions at two major pharmaceutical companies, Novartis and Schering. At Schering, he served as global head of Companion Diagnostics.
It's relevant to this discussion that LabCorp, one of the two dominant reference labs in the country along with Quest, purchased Covance in 2015 (see: LabCorp to Acquire Covance for $6.1B). Covance is the major reference lab supporting clinical trials and contract research. Here are links to some my previous blog notes about Covance (see: Covalence's Execution of a Global Virtual Clinical Lab; Covance Genomics Lab Receives CLIA Certification; Covance Signs Clinical Research Deal with Indiana University School of Medicine). Below is an excerpt from the article above commenting on the Covance purchase by LabCorp:
The acquisition leverages LabCorp's leadership in medical testing and Covalence's leadership in contract research, they said, and the combined firm's technologies will improve patient recruitment for clinical trials, improve efficiency in clinical trials, and deliver data more quickly to drug sponsors, physicians, and patients....The increased scale of its central lab operations and collective data resources are expected to drive greater R&D productivity for its clients, they said.....Managed care revenues will comprise about 32 percent of the combined firm's total revenues, while pharmaceutical and biotechnology business will comprise about 29 percent of revenues. About 22 percent of revenues will derive from commercial customers, 12 percent from Medicare and Medicaid, and 5 percent from private patients. The new firm will have established relationships with all of the top 20 drug firms and an "attractive payor mix," LabCorp and Covance said.
By turning to a former pharmaceutical executive as its CEO, ARUP is signaling the importance in its business model of clinical trials and companion diagnostics. The pharmaceutical industry is a key player in what has been called Big Medicine along with large hospital systems, health insurance, pharmaceutical benefit managers (PBMs), and the dominant healthcare payers like the federal government (see: Physician Private Practice Declines; the Last Barrier to Emergence of "Big Medicine"; The Institutionalization of Healthcare; Consequences of Big Medicine?; "Big Medicine" Players Squabble among Themselves). The fact that major reference labs are now tilting more toward work related to the pharmaceutical industry bespeaks an acceleration of this trend.