With WIL, Charles River to expand client’s research efforts
“WIL Research’s CDMO business is a new capability for Charles River, which will enable us to offer broader support for our clients’ drug research efforts,” Bill Barbo, Corporate Senior Vice President, Global Sales and Marketing tells OutsourcingPharma.com.
The acquisition will also enhance Charles River’s global reach, in addition to expanding its scientific capabilities and access in new markets, specifically biotechnology.
“WIL also increases our interface with small and mid-size biotech, which is our fastest-growing client segment, and provides a larger presence with agricultural and industrial chemical clients,” adds Barbo.
WIL Research has specialized in supporting the small and mid-size biotech client segment, and, according to Barbo, is well known and respected for flexible and responsive project management.
“With our broader product offering, we believe we will be able to expand our presence with these clients,” he adds.
Barbo is particularly excited about the addition of facilities in Europe, including a site that is co-located with the company’s flagship Charles River Europe research facility in Lyon, France.
Strategy
Garen Sarafian, VP Healthcare Technology & Distribution at Citi Research, says “We expected Charles River to be more active in M&A after the company’s investor day last year, and believe they chose wisely in targeting a well-regarded company we’ve been familiar with for several years.”
According to Sarafin, the acquisition makes strategic sense for Charles River, “in our view, particularly the adjacencies in CDMO that includes agricultural and global industrial chemical clients, diversifying its client base,” he adds.
The acquisition may also help reduce the potential risk of re-opening Charles River’s Shrewsbury, MA-based facility – a move which has been viewed cautiously by analysists.
However, with WIL on its side, Charles River may reach “at least adequate scale near term by selectively reallocating work from a now greater number of projects,” says Sarafin.
Additionally, new redundancies should better tackle unforeseen issues in bringing the facility back online. “Management clearly implied a slightly lower utilization rate for WIL than CRL that is closer to approaching full capacity,” adds Sarafin.
Consolidation will also be a positive for the preclinical space, “supporting upward momentum in price or at the least, protecting against a more aggressive pricing environment,” says Sarafin. “Such consolidation could lead to more substantial improvements in pricing, something that’s underwhelmed us in prior years.”
The transaction is expected to close early in the second quarter of 2016, and is predicted to add $150 to $170m to Charles River’s 2016 consolidated revenue and $240 to $250m in 2017.
"We are very pleased to be able to add such a respected peer to Charles River," concludes Barbo, "and look forward to working together to provide greater support for our clients’ R&D efforts, as they increasingly rely on CROs to bring new therapies to market."
