Charles River Laboratories (NYSE: CRL) is wagering $1.6 billion that the future of contract research organizations lies in China. The Boston-based CRO announced early today that it has struck a deal to buy WuXi PharmaTech for $21.25 a share in cash and stock.
Charles River has been deeply involved in expanding its Chinese operations for the past several years. And this new deal will increase the size of its footprint in China considerably. "This transaction revolutionizes the contract research landscape by creating the only global contract research organization, or CRO, to offer fully integrated research and drug development services from molecule creation to first-in-human testing, boasted Charles River CEO James Foster.
In the deal, WuXi CEO Ge Li becomes executive vice president and president of global discovery and China services in the Charles River organization. And Charles River snares a large animal-testing operation while absorbing a big competitor for its drug development services.
"This is a vote of confidence that China will be the main location for drug R&D outsourcing in the future," Jinsong Du, an analyst at Credit Suisse Group AG, tells Bloomberg. China's CRO market has been booming at a blistering pace of 30 percent per year.
- take a look at Charles River Labs' release
- here's the story from Bloomberg