Charles River announced it will lay off 300 people and suspend operations at its Preclinical Services (PCS) facility in Shrewsbury, Massachusetts by the middle of the year, when ongoing in-life studies will have been completed. The CRO didn't specify when it would reopen the facility, saying only that it would be up and running again "when global preclinical market conditions improve and the Company requires additional capacity." In a statement, CEO James Foster says he hopes demand for preclinical services will pick up in the second quarter of the year, but that Charles River will wait for further improvement in the market before it reopens the Shrewsbury site.
When small biotechs were hit hard by the economic crisis last year, many of them chose to walk away from everything except their lead programs. That meant cutting back on preclinical R&D in many cases. The operating suspension is expected to reduce operating costs by approximately $20 million in 2010, with an annualized run-rate of approximately $25 million. About 30 people remain on staff to oversee operations at the facility.
"...The extended softness in preclinical market demand for the last fifteen months has resulted in excess capacity throughout the contract research industry and in our own global network of PCS facilities," explains Foster. "We have thoroughly evaluated the anticipated demand and our available capacity, and determined that the leaner infrastructure will improve our PCS operating margin while providing us with sufficient capacity to meet the expected upturn in demand for preclinical services in the biopharmaceutical industry."
- here's Charles River's release
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