Many of your comments about the LAB Research acquisition have focused on its impact on your geographic presence– Why is having a global reach important to CIT?
In the very competitive environment in which we operate, we believe that proximity with our customers is a key benefit that we have to offer. This proximity has to be viewed in term of geographic presence, but we also want to be close to the regulatory agencies. We also want to be customer’s friendly, by bidding and invoicing in customers’ currencies.
From this point of view, Lab Research’s acquisition brings us a state of the art facility in Laval, Canada that can serve the entire North-American market, the first market worldwide. The two other centres, located in Denmark and Hungary, will reinforce our current market position on the European continent, and will position us as one of the major players.
We are also showing good complements in expertise, which will reinforce our overall service positioning.
Our clients are also global players and not really national actors. To service their needs, we have to have this global reach. It is also important for us to understand new trends and development in drug regulation and in preclinical testing worldwide.
What does LAB add to your non-clinical research business that you didn’t have before?
LAB Research provides studies by the inhalation route that CIT didn’t have. European clients already have access to this technology through LAB in Hungary. This could potentially be up and running shortly, for Northern American clients.
Our colleagues in Denmark have developed a unique expertise with mini-pigs, which includes teratogenicity. I do believe that we are in a leadership position worldwide for those studies now.
In Hungary, LAB provides a strong expertise in ecotoxicology studies. This is going to be very instrumental addressing the needs of the chemical and agro-chemical companies, especially in the context of the Reach regulation.
CIT, which is the largest and longest standing of the four laboratories, brings strengths in a broad range of activities: NHP is a key area of strengths. In addition, CIT has a robust expertise in repro-toxicology and in carcinogenicity, a domain where more than 100 studies were performed, thanks to our remarkable team of pathologists.
CIT is also one of the very rare CROs to offer services in genomics. CIT with the addition of its subsidiary AtlanBio, is also one of the largest capacity in Europe, for bio-analysis. This includes all chromatography techniques, RIA, Multiplex ELISA, and other approaches for innovative biomarkers.
How does CIT plan to integrate LAB’s operations and workforce? What are the areas in which savings, divestitures, or indeed investments, can be made?
Such cuts are not our primary objective. We are focusing more on best practice sharing, on leveraging purchasing and on all other aspects of our operations that don’t impact customers’ focus. Our rational is not to limit any of the services from any of the sites, which would be in contradiction with our proximity with client’s statement.
LAB has struggled somewhat in the last year– particularly its Canadian business which has seen revenues fall - How does CIT intend to address this?
Indeed, we were very impressed with the Canadian team’s performance in a falling market: even though growth was more difficult to find, this company has resisted far better than the global market place.
Lately, given the financial issues, clients had some concerns about the stability of the company. We have now resolved this issue and the deal with CIT has brought a durable solution. We already noticed that customers are willing to renew or to initiate their collaboration. Our task now is to go out and conquer clients’ confidence again, one a larger scale.
LAB also said it has faced pricing pressure from larger CROs in North America in recent years. Is this something that CIT has seen in its own business and how do you plan to tackle this as owner of LAB?
Yes of course and this is, indeed, a world wide phenomenon. First of all, most of the clients, when receiving very different prices, perfectly understand that these prices rarely cover the same level of service or of quality. This being said, I think that the prices in our industry have now reached a level where they can't decrease anymore. We are starting to see some stability in pricing now.
Naturally, we also have to find ways to increase our current efficiency. CIT has embarked on an important Lean Management process, and when possible, will seek for simplification of processes, and will gain in productivity and in reactivity for our clients. Clearly though, like the large majority of CROs, we hope for better times and we think that the market will recover, with time.
Our new dimension and the current dynamics in place in CIT-LAB Research Group in general, will place us in a better position when the market recovers.
What impact has LAB had on CIT’s customer base? Yours is predominantly pharma and biotech focused, whereas LAB’s includes customers in the agro and petrochemicals sectors – Does CIT plan to broaden its scope?
With the acquisition the customer’s base is now doubled. CIT has always had an open spirit in terms of products sector and clients bases. For example, we recently moved into two new businesses: the in-vitro and our services in genomics.
When we started our in-vitro services, we were surprised with the clients’ demands in this field. In the same way, we have identified good opportunities in genomics. Leadscreen has also been introduced recently at CIT, which brings a unique value for clients, in packaging a 14 day multidisciplinary study. These examples show our willingness to work in new areas.
And finally, how healthy is pharmaceutical industry demand for non-clinical research services at the moment and what do you expect to be the key demand drivers going forward?
It is clear that one area of demand is coming from big pharmaceutical companies. With our enlarged structure we should become, more than ever, a company of choice for those large players.
Still, because we will favour client’s proximity and decentralised decision making processes, we will keep costumer’s intimacy as a core value that will serve biotech needs diligently.