CRL plans M&As ahead of surge in discovery outsourcing

By Fiona BARRY

- Last updated on GMT

Charles River says it is shopping for more M&As. (Picture: Caden Crawford/Flickr)
Charles River says it is shopping for more M&As. (Picture: Caden Crawford/Flickr)

Related tags Drug companies Pharmacology

Half of drug discovery will eventually be outsourced as the service area goes the way of contract toxicology, according to the CEO of Charles River Laboratories (CRL).

James Foster, head of the preclinical contract research organisation (CRO), said discovery is “typically something drug companies like to hold close their chest, but that will change.​”

He estimated 10-15% of discovery work is currently contracted out, but “as drug companies dismantle capacity and discern what they need to do internally​” these figures will “go the way of toxicology eventually, which is 50% outsourced,​” he told an audience at the Morgan Stanley Global Healthcare Conference in New York last week.

Accordingly, Foster said CRL has been priming its discovery services business, notably with its acquisitions in April this year of discovery services divisions Argenta and BioFocus​ from Belgian biotech Galapagos.

Analysts told the $185m (€134m) purchase – which added in vitro​ capabilities to CRL’s existing in vivo​ services – would add $70m to CRL’s 2014 revenues.

The extra offerings in in vitro​, upstream, target identification, and medicinal chemistry “will be very important going forward​” as sponsors seek to cut internal discovery, said Foster.

Acqusitions planned

In preparation, CRL plans to add more capabilities to its discovery business, both organically and through M&A.

Foster singled out infectious disease as an area to add to CRL’s services portfolio, both in vivo and in vitro​, supplementing existing oncology, CNS, and metabolic services.

CRL also plans to up the length of time it works with sponsors; “it’s a very, very important move for us​” to stick with drug companies beyond target identification and “thoughout the whole process.​”

Foster said there is a “high probability​” CRL could retain discovery work beyond this point: by this stage, “we would know the molecule as well or better than the client – we could help them file with the FDA.​”

Related topics Preclinical Research Preclinical

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