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INDIANAPOLIS-Princeton, NJ-based Covance Inc. is taking over a 450-acre drug development campus from Eli Lilly and Co. in Greenfield, IN as part of a partnership between the two companies. Covance will pay $50 million for the campus, which includes Lilly’s animal testing facility, and will provide Lilly with a $1.6 billion service contract for the next 10 years. In return, Lilly will turn over the facility here, and will outsource to Covance several of its functions, including laboratory, toxicology and imaging services. As part of the deal, Covance will be able to use the campus to market its products and services to other drug companies.

When the deal closes, Covance will assume control of the site here and most of the operations. “We are very excited to welcome world-class Lilly scientific talent to Covance, and to take possession of valuable state- of-the-art assets, including more than 600,000 square feet of laboratory space, and acquire new service lines that will help us accelerate our long-term, strategic growth plans,” said Joe Herring, chairman and CEO of the company, in a statement. “Covance will invest in this facility and maximize its capacity utilization by conducting substantial work with Lilly and bring in new work from other pharmaceutical and biotechnology clients. We expect the Greenfield site to be a key contributor to the future growth and success of Covance.” Officials from the company did not return a call for comment.

In its own statement, Lilly acknowledged the sale of its nearly century-old property. “These actions reflect Lilly’s determination to take the necessary steps to compete in a very challenging marketplace, in which our customers are demanding innovative, high-quality, affordable medicines,” said John Lechleiter, president and CEO of the company, in the statement. “These are difficult but necessary decisions we must make in order to compete successfully as an independent Indiana-based company.” Company officials could not be reached for comment.

Lilly also announced that its Elanco animal health division will move to a new leased headquarters in Hancock County, IN. The firm will lease its current space in Greenfield from Covance, and construction on a new facility will commence upon final site selection, completion of plans with the developer and receipt of local government approvals. The facility will be complete by late 2009 or early 2010, said the company in the statement.

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