CRL on the prowl for Chinese M&As in world’s future science hub

By Fiona BARRY

- Last updated on GMT

China is set to rocket as a life sciences hub, says Charles River. (Picture: AK Rockefeller/Flickr)
China is set to rocket as a life sciences hub, says Charles River. (Picture: AK Rockefeller/Flickr)

Related tags Contract research organization China

Charles River Labs (CRL) has singled out China as an area of “disproportionate growth” in biologics R&D and says it is on the hunt for preclinical acquisitions in the region.

CEO James Foster said China will become second only to the US as a large-molecule development hub and he plans to add to the contract research organisation (CRO)’s portfolio via M&As of Chinese services companies.

CRL’s first acquisition in China was a 75% buy-out of research model company Vital River in late 2012.​ The division is experiencing “very good margins​” and has a “high growth rate potential,​” said Foster.

He explained Charles River did not buy out the whole company, “although we have the right to do that​” because it wanted the firm to retain local market knowledge. “We think it’s critical to have a Chinese partner that knows the landscape and how to get things done there.​”

Now the company plans to buy more Chinese services. “We will carefully, principally through acquisition, build out our current capabilities in China. That’s definitely a geographic interest of ours on the M&A side.​”

The plan involves changing some local approaches, he said. “It’s going back in time. The same things we did in the US, Europe, and Japan about educating the marketplace about the need for pristine animals in research – [is what] we’re doing in China.

That’s gonna be at least the second largest life sciences centre and that’s gonna be an important market.​”

Japan and Europe

Apart from China’s “disproportionate growth rate​,” and obvious US dominance, biopharma is otherwise “pretty well balanced globally,​” Foster told an audience at the Morgan Stanley Healthcare Conference in New York last week.

CRL’s strategy for the near future is to acquire a wider range of services so it is posed to work with pharma companies as they dismantle their facilities and seek more outsourcing.

Heavy consolidation in Japan has led to a lot of infrastructure reduction there, expanding the contract research market, he said. Europe is following suit, although Foster predicted the handful of pharma giants based there “will prevail and remain strong​.”

The CEO added that globally, CRL had seen larger sales of its services to biologics companies than small-molecule pharma in the last financial year; “for the first time in our history.

That’s exactly what we want, given that so much discovery is coming from biotech. So much money is going directly from pharma to support biotech discoveries– we should always be a mirror image of that.​”

Related topics Preclinical Research Preclinical

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