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LabCorp (LH) to Strengthen Laboratory Footprint in Japan

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Laboratory Corporation of America Holdings or LabCorp (LH - Free Report) recently enhanced its central laboratory presence and drug development capabilities in Japan by expanding CB Trial Laboratory. This central laboratory is co-managed by LabCorp Drug Development and a renowned Japan-based clinical laboratory testing services provider, BML. The latest development builds on LabCorp and BML’s more than a decade-long strategic partnership.

The planned laboratory expansion will enable LabCorp to advance biomarker and esoteric testing services, increase its companion diagnostics offering and strengthen the integration with its clinical development services. The company will also be able to increase its focus on cell and gene therapy research and development as part of its commitment to precision medicine and reinforce its position as an oncology leader.

Per LabCorp’s management, the expanded collaboration will enhance the company’s laboratory footprint, allowing it to offer shorter turnaround times, superior in-country sample management and full lab testing services for global clinical trials in Japan. This is expected to provide patients, clients and health care providers with the information required to guide important decisions.

An Overview of the Planned Expansion in Japan

Under the collaboration, LabCorp and BML will start working on a new laboratory facility in Kawagoe, Saitama, extending capacity and services for pharmaceutical and biotechnology clients. The new facility will offer nearly 4,000 square meters of dedicated space for global clinical trials managed by Labcorp Drug Development.

It will be more than five times the size of the existing CB Trial Laboratory and will feature added capabilities like genomics, microbiology and companion diagnostics. Added to this, the new facility will offer expanded offerings in current lab capabilities, including flow cytometry, immunology and anatomical pathology and histology.

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The expanded laboratory is anticipated to be completed by early 2025. Management at BML believes the laboratory expansion will lead to enhanced services, greater resources and improved outcomes for its clients and patients.

Industry Prospects

Per a report by Grand View Research, the global clinical laboratory service market is expected to see a CAGR of 4.7% during 2021-2028. The growing burden of chronic diseases, rising demand for early diagnostic tests, the introduction of companion diagnostics, biochips and microarrays and rapid technological advancements, among other factors, can be attributable to market growth.

Given the market prospects, LabCorp’s planned laboratory expansion in Japan seems strategic.

Notable Developments

LabCorp engaged in several noteworthy developments in June 2022.

The company gained FDA emergency use authorization (EUA) for its VirSeq SARS-CoV-2 NGS (next-generation sequencing) Test on the PacBio Sequel II sequencing system. The VirSeq SARS-CoV-2 NGS Test can detect certain SARS-CoV-2 strains in patient samples. It is the first test approved for identifying and distinguishing between SARS-CoV-2 Phylogenetic Assignment of Named Global Outbreak (PANGO) lineages, which are genetic variations in circulating virus strains.

The company introduced a new testing program, sponsored by Eli Lilly and Company (LLY - Free Report) , to help advanced non-small cell lung cancer (NSCLC) patients and their physicians make detailed treatment and care management decisions based on comprehensive genomic insights. The program will leverage LabCorp’s OmniSeq INSIGHT test to offer comprehensive genomic and immune profiling for cases that match the eligibility criteria. Management at Eli Lilly and Company projects the latest agreement to bring OmniSeq INSIGHT tests to more patients will demonstrate the importance of precision medicine.

Share Price Performance

The stock has underperformed its industry in the past year. It has declined 13.4% compared with the industry’s 10.1% fall.

Zacks Rank and Key Picks

Currently, LabCorp carries a Zacks Rank #3 (Hold).

Two better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) and Novo Nordisk (NVO - Free Report) .

AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has outperformed its industry in the past year. AMN has gained 18.3% against the industry’s 47.8% fall.

Novo Nordisk has a long-term earnings growth rate of 14.5%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 7.6%, on average. It currently flaunts a Zacks Rank #2 (Buy).

Novo Nordisk has outperformed its industry in the past year. NVO has gained 31.7% against the industry’s 16.5% growth.