Charles River taking advantage of biotech growth, CEO says

Charles River taking advantage of biotech growth, CEO says

For the first time ever, Charles River Laboratories is seeing its biotech revenues eclipse its pharma revenues, Jim Foster, chairman, president and CEO of CRL, told participants at the Baird Growth Stock Conference last week.

We’re working with a lot of start-up biotechs that are virtual – hundreds of biotech companies, primarily domestic, some Europe, some Japan and a lot more in China coming down the pipeline,” Foster said. “I would be surprised if Big Pharma doesn’t continue to pour more money into biotech.”

Although the deals with biotech companies are typically less valuable than deals with larger pharma clients, biotech clients are “not very price sensitive” and venture capital firms are continuing to pour billions into start-ups, Foster said.

M&A activity

Echoing what many other CROs have said before him, Foster said there seems to be an inevitability around the potential for more pharma M&A activity as “competition tends to get nervous when there’s a big deal.”

Foster added that Charles River’s core animal business will take a hit from any future mergers as it did when Pfizer bought Wyeth and Merck bough Schering Plough. About 20% of Charles River’s revenue is tied up in strategic partnerships, which has not stopped the company from re-upping its future guidance to 9-11% in top line revenue growth.

And despite the trend right now toward prospective mega-mergers, Foster said he believes “drug companies will have to get smaller again,” especially as CROs continue to grow and “do everything as well, and faster, and less expensively” than the largest pharma companies.

If you look at our toxicology business, even after reducing our business 20%, we still have 4,000 employees in this space, while probably the largest drug company has one-tenth of that,” Foster said.

China

China also represents a big growth opportunity for Charles River as the country plans to invest about $2 trillion into its life sciences businesses. However, that money may be strictly for the local market, Foster said, noting “most of the money is going to be spent in China for China…[so] if you want to play, have to have a Chinese partner.”

Charles River acquired microbiology subcontractor BRASS in China in October, and Foster said he’s “looking to grow services businesses there as a lot of our competitors are not going to play in China.”

We’re looking at several small acquisitions over there right now,” he added. 

Related News

Big pharma looks to reduce outsourcing partners, CRL CEO says

Big pharma, biotech companies look to reduce outsourcing partners, CRL CEO says

Pfizer-AZ deal collapse may have quashed some CRO optimism, but mid-to-high-single-digit growth still predicted

Business as usual for CROs as megamerger optimism subsides

Small biotech experts offer cautious approach to CRO use

Small biotech experts offer cautious approach to CRO use

The contract is now set to expire in September

Charles River loses $12m National Cancer Institute contract

China is set to rocket as a life sciences hub, says Charles River. (Picture: AK Rockefeller/Flickr)

CRL on the prowl for Chinese M&As in world’s future science hub

CRL buys ion channel tech firm ChanTest citing US FDA comments on testing

CRL revs boosted by Argenta and Biofocus; buys ChanTest

Preclinical recovery and Covance's preoccupation with LabCorp could be beneficial for Charles River

Covance's LabCorp distraction will drive opportunities for CRL, says analyst

A resurgence for the preclinical sector seems to be continuing

Charles River moves forward with plans to re-open Massachusetts preclinical site

Gram-positive anthrax bacteria

Endotoxin and microbial testing to become portable

CRL Preclinical Pacts with Target Health and Theorem

Charles River Forms Preclinical Pacts with Target Health and Theorem

Charles River cutting staff as GLP tox continues to stutter

CRL launches QC testing service

Charles River launches new quality control service for biotech and pharma industry