The merger - of which financial details have not been revealed - will create a contract research and animal models company with annual revenue of around $500m (€360m), according to Huntingdon’s Managing Director Andrew Gay.
Gay told Outsourcing-Pharma.com Huntingdon’s preclinical services would be boosted with those of Harlan’s, with “not a great deal of overlap” between capabilities and customers of the two firms. Furthermore, he continued, the deal would bring Harlan’s complementary Research Model & Services (RMS) business to the new entity on top of increased contract research services.
“This puts us third in size in serving the pharma industry amongst the preclinical players,” he told us, with public firms Charles River Laboratories (CRL) and Covance leading the way. “For animal breeding we are now only second to CRL.”
Whilst there has been much discussion regarding the consolidation of mid-sized clinical research firms – PRA and RPS, for example – in the preclinical sphere mergers have either been more subdued, with bolt-on acquisitions by the bigger players – such as CRL’s recent €134m spend on Galapagos’ discovery service firms – standing out.
“Preclinical service firms are generally smaller organisations [than later phase CROs],” Gay said, but the Huntingdon-Harlan consolidation is not unprecedented. “French firm CytoxLABs , for example, have bought businesses and grown through consolidation in the past.”
The deal will see Huntingdon’s five mostly European locations complemented by 33 global Harlan sites with a total of approximately 3,500 staff working for the new entity. An assessment of the two firms will take place over the next few months and an integration plan made.
The timing of this merger comes at a time analysts are predicting an improvement in the preclinical sector following several years of hardship as the economic downturn affected pharma’s R&D outsourcing budget.
“The final quarter of last year saw a slight improvement in the profit and revenue of the public preclinical CROs, and we saw similar,” Gay said.
Whilst the latest financial report from CRL may suggest a recovery may have stalled slightly, Gay said “hopefully there will be a return to normal outsourcing levels.
“If that coincides with this merger then we are in a very good place to serve our customers,” he continued, adding there was space for further expansion if necessary.