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Covance Inc. (CVD - Analyst Report) recently announced that it had completed the expansion of its central laboratory facility in Singapore. Following the expansion of the laboratory by 50%, the company will be able to meet the demand for drug development in the Asia Pacific region going forward.  

Apart from the recently expanded central laboratory in Singapore, Covance also has central laboratories in Indianapolis in the U.S.; Geneva in Switzerland; Shanghai, China; and Tokyo in Japan.  The expansion of the Singapore facility reflects ongoing focus and continued investment in the country. It also underlines the strategy of business expansion in the Asia Pacific region, especially of focus on high growth countries like China and Japan.

According to the company, the expansion of the Singapore facility doubles the genomic footprint in Singapore. It also improves anatomic pathology and nutritional chemistry capabilities of Covance. The central laboratory facility in Singapore is one of the largest in the country that provides clinical testing services to the customer base across Asia, including high focus markets such as South Korea, Hong Kong, Taiwan, the Philippines, Australia, and India. The focus on emerging markets is all the more significant given the saturation and uncertain growth in the developed markets.

Per management, the facility will improve Covance’s effort to meet the global market demand for R&D in vital therapeutic areas like oncology and metabolic diseases. According to the Economic Development Board of Singapore, the Singapore facility offers the company a strategic location for contract research organization (CROs) to enhance the operations to meet the dynamic and growing demand in Asia. Additionally, Covance’s investment encourages confidence in the country’s ability to support transitional and clinical research.

Our Take

Based on the bright growth prospects, the stock carries a Zacks Rank #2 (Buy). Covance is not the only healthcare stock doing well. Other stocks such as Conceptus Inc. , Cyberonics Inc. (CYBX - Analyst Report) and Cepheid (CPHD - Analyst Report), carrying a Zacks Rank #1 (Strong Buy) also warrant a look.

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