Many of the prescription medicines on the market today were developed with the assistance of Covance Inc., one of the world’s largest drug-development services companies. Covance helps pharmaceutical and biotechnology companies by providing testing services including preclinical investigations; by designing and carrying out human clinical trials; and by determining the safety and effectiveness of drugs through post-marketing studies. Covance also conducts toxicology studies and biostatistical analyses and offers testing services for the chemical, agrochemical and food industries.
The company was born of a Corning Inc. move into laboratory and clinical services during the 1980s, when the glass maker acquired a number of drug-development companies. In 1997, it spun off these businesses into a single publicly traded, independent entity — Covance. As of last year, the company’s revenues of more than $2 billion earned for it the No. 858 position on the Fortune 1,000. Covance maintains headquarters in Princeton, N.J., and has more than 11,000 employees in 60 countries.
LEGAL TEAM AND OUTSIDE COUNSEL
Eight lawyers, including general counsel James Lovett, comprise Covance’s legal department. He calls upon a range of firms for counsel, depending on the matter and jurisdiction. Among them are Dechert; Littler Mendelson of San Francisco; and McDermott Will & Emery, along with New York firms Cravath, Swaine & Moore and Shearman & Sterling. More work than not gets handled in-house.
Lovett uses a mix of billing methods for his outside attorneys — frequently variations on fixed fees, sometimes including a success component. “I like firms to do well when we do well,” Lovett said.
Lovett wears multiple hats, making for a “huge variety” of work, he said. He is responsible for Covance’s global legal affairs, government affairs and corporate security. He leads two of Covance’s business units comprising 1,000 employees — market-access services, which entails drug pricing and reimbursement and insurance coverage; and nutritional chemistry and food and safety. He sits on the company’s executive committee and reports to chairman and chief executive officer Joseph Herring.
According to Lovett, his job has been transformed during his 11 years at Covance, as the company grew by 150 percent. He has built a legal team with sufficient expertise to act as primary counsel for Covance’s business units. The situation “allows me to be the general counsel of a company that is now twice as big, but I spend half the time” on legal affairs, he said. Today, Lovett splits his focus between lawyering and being a businessperson.
TRANSACTIONS AND REGULATORS
The legal team within the past several years has helped forge some of the largest research-and-development outsourcing alliances in the industry. In 2010, Covance signed a $2 billion, 10-year services agreement with Sanofi-Aventis S.A. and acquired that company’s facilities in France and the United Kingdom. It opened the Nutritional Chemistry and Food Safety Laboratory in Battle Creek, Mich., as part of a seven-year agreement with Kellogg Co. In 2008, it sealed a deal with Eli Lilly and Co. to buy and operate Greenfield Laboratories in Indiana, where it undertook toxicology testing and research and development on Eli Lilly’s behalf in a 10-year services agreement valued at $1.6 billion.
Covance’s activities as a public company fall under scrutiny by the U.S. Securities and Exchange Commission. Its drug development work is overseen by the U.S. Food and Drug Administration and counterparts around the world. Half of Covance’s sales and employees are located outside the United States. The European Medicines Agency regulates pharmaceuticals within the European Union, while State Food and Drug Administration performs that function in China.
Domestically, Sarbanes-Oxley Act compliance is “pretty routinized these days,” Lovett said, and compliance with the Dodd-Frank Act regulations that have been implemented thus far is “in pretty good shape.” Covance actively engages in lobbying and, through the Association of Clinical Research Organizations, Lovett testified before Congress concerning the Food Safety Modernization Act, which became law on January 4, 2011.
Covance is mainly a services company, so its legal work is not particularly patent-intensive, according to Lovett. However, the company does own a good-sized portfolio, he said, and the legal team does the usual policing. Covance is “careful to comply” with environmental regulations, he added.
Covance’s international position generates routine immigration work that the legal department takes care of. Lovett travels abroad “a fair amount,” has a special fondness for Yorkshire, England, and visits China once per year. A general counsel, he said, “can’t be an expert on the laws of 60 countries,” so his team works with outside counsel to comply with foreign laws.
The company is nonunionized within the United States, but the legal department is intimately involved in maintaining security at Covance facilities. The department steps in if insurance issues, normally overseen by the risk-management team, become significant.
Lovett recognizes a responsibility to engage in pro bono activities. His main focus at the moment is educational reform, which he called “the civil rights issue of our time.” He is a trustee for Scholar Academies, a charitable charter-school management organization that focuses on urban areas.
ROUTE TO THE TOP
Lovett joined Covance in 2001. He arrived from FMC Corp., a Fortune 500 manufacturer of machinery and chemicals. Before that, he was a partner in McDermott Will & Emery’s Chicago office. Lovett began his legal career as a clerk for Judge Boyce Martin Jr. of the U.S. Court of Appeals for the Sixth Circuit. He graduated with a bachelor’s degree from Northwestern University in 1985. Four years later, he earned a J.D., cum laude, from Harvard Law School.
The Owensboro, Ky., native spends his spare time skiing, hiking, playing tennis and reading.
He is a member and former chairman of the legal and government affairs committee of the Association of Clinical Research Organizations.
Lovett’s business mantra is: “Be a true business partner — not just from a legal perspective but within a broader business context of culture, finance and competition.” Achieving this, he said, provides a “comparative advantage” to an in-house lawyer. Developing a quality team is “fun and gratifying,” he said, and installing the “best people” allows a general counsel the opportunity and freedom to personally do more.
LAST BOOK AND MOVIE
China in Ten Words, by Yu Hua; The Amazing Spider-Man.
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