Charles River Laboratories has once again decided to assemble M&A, and this was a result of the new acquisitions of Brains On-Line and KWS BioTest. They are talking in a nonclinical contract research organization known as MPI research for a heavy sum of $800 million.
The chairman and CEO of Charles River, James Foster, made a statement in saying, “MPI is an exceptional strategic fit for Charles River because it incorporates the key attributes we require in an acquisition: access to growing end markets, high-quality services, scientific expertise, and complementary capabilities”.
MPI has caught the eyes of a powerful client base in smaller and midsized biotechs, this is due to the drug being in an early development stage. Charles River claimed that this addition will broaden its current testing services in toxicology. This includes molecular biology, ophthalmology, medical device testing, juvenile toxicity. MPI’s massive facility in Michigan is exactly the kind of infrastructure the company needs in order to grow in the future.
The purchase price is set at $800 million, and for the past year MPI had claimed to be bringing in $240 million in revenue. Charles River also anticipates that the deal will add an additional $170 million to the companies $190 million revenue this year. They also predict that $260 million will be added to the $280 million in 2019.
The company reported a revenue increase, in addition to the fourth quarter results, that stated a revenue of $478.5 million from its ongoing operations. The CRO reported a revenue spike of 10.5% bringing it to $1.86 billion last year, but organic revenue growth was at 6.7%. Out of the 46 new drugs that were FDA approved last year, Charles River said to have worked on 34 of them.
Regardless of the new additions to its cancer research, the company still took a small dip of 0.1% from the research models and services sector. It can be inferred that this was caused by a decrease in the demand from large biopharma companies. Aside from this, investors were still assured revenue growth due to new opportunities with China.
The discovery and safety assessment business reported a strong increase of 17.1% from 2016 to 2017. Another segment that witnessed revenue increase was the manufacturing support. It increased 9.5% to reach $384 million. Due to the fact that several drugs are being developed by biotechs that don’t possess an internal manufacturing infrastructure, there has been a dramatic increase in the demand for Charles River’s manufacturing services.
This year, Charles River anticipates a revenue increase of around 16% to 18%, and this includes the impact of MPI.
It’s been said that the company has a desired executive structure, and this has put Charles River on a path to success where they plan to almost double in size within the next five years.