CRL’s preclinical arm will struggle, but RMS and strategic deals hold hope for 2012

By Gareth Macdonald

- Last updated on GMT

Related tags: Revenue, Contract research organization, Crl, David windley

Charles River Laboratories’ (CRL) preclinical division will continue to struggle in 2012 but the recent uptick in strategic partnership activity is a ray of hope according to a leading analyst.

The US contract research organisation (CRO), which is due to hold a 2012 guidance call tomorrow, is unlikely to see revenue growth next year on continuing weak demand for preclinical services and price competition in toxicology said Jefferies & Co’s David Windley in an investor note.

CRL is faced with a contracting industry, while at the same time defending threats to its market share​, “ he said, adding that toxicology volumes remain depressed and the firm’s recent headcount​ and capacity​ reductions do not indicate that recovery is imminent.

He also suggested the lack of volume and price pressure from private testing labs has forced CRL to reduce its prices and this is likely to impact its 2012 guidance as well.

RMS growth

In contrast CRL’s research model services (RMS) business, which was recently reorganised regionally​ and bolstered by an agreement with Pfizer​, is likely to see growth in 2012 according to Windley who cited growing multi-cartridge sales as an important driver.

This would continue the pattern seen in Q3, during which revenue generated by CRL’s RMS business increase 7.7 per cent to $171.5m.

Strategic deals for the future

Another source of optimism for 2012 is the recent expansion of CRL’s agreement with a ‘large client,’ said Windley.

Speaking during CRL’s Q3 conference call in November, CEO Jim Foster said​ the firm had extended its deal with an unnamed client and predicted that the agreement would generate up to 5 per cent of CRL’s revenues in 2013.

Windley agreed with this forecast, describing the deal – which added in vivo pharmacology and DMPK to the services agreement – and the fact “CRL is actively pitching this model to additional clients​” as providing a ray of hope for 2012.

Related topics: Preclinical Research, Preclinical

Related news

Show more

Related product

Global Clinical Trial Lab Services

Global Clinical Trial Lab Services

Q² Solutions | 01-Apr-2020 | Product Presentation

As a leading global lab services partner, we provide operational excellence, scientific leadership and innovation through technology. We offer end-to-end...

Related suppliers

Follow us

Products

View more

Webinars