Charles River swoops on early-stage CRO Citoxlab

Charles River
The deal brings in new technical capabilities, a broader geographic reach and boosts Charles River's SME business. (Charles River)

Charles River Labs has added another string to its early-stage R&D bow by acquiring preclinical services specialist Citoxlab for around $510 million in cash.

The takeover is the latest acquisition by Charles River in the last couple of years as it seeks to consolidate its position as a dominant player among early-stage contract research organizations (CROs). The company claims to have contributed to the R&D behind 80% of the FDA-approved drugs in 2017.

France-headquartered Citoxlab focuses on safety assessments and other nonclinical testing work such as drug discovery and medical device testing, and the company will contribute around $115 to $130 million to Charles River’s revenues this year.

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Alongside the acquisition deal, Charles River also announced a healthy 22% rise in 2018 revenues to $2.27 billion in 2018, fueled by the recent acquisitions of MPI Research and KWS BioTest, which also bolstered its nonclinical R&D credentials.

Citoxlab operates four main laboratory animal facilities in France, Canada, Denmark and Hungary, and according to Charles River, will expand its geographic spread, particularly in Europe, and give it a foothold in “growing end markets.” It slots into the CRO giant’s drug and safety assessment (DSA) business, which grew by more than one-third to $1.32 billion last year.

The deal also extends its scientific capabilities, particularly in toxicology, preclinical device testing, nonregulated discovery services such as DMPK services, drug transporter and drug-to-drug interaction, and genomics. As an added bonus, Citoxlab brings with it a strong client base in small and midsized biotechs, a market segment from which Charles River is seeing fast growth.

James Foster—Charles River’s CEO—said the latest deal would “expand and solidify Charles River’s position as the partner of choice for our clients’ early-stage research needs, at a time when we believe there continues to be significant demand for outsourced services from both biotechnology and pharmaceutical companies.”

That demand stems from an acceleration biopharmaceutical research activity across large biopharma, biotech and academic institutions in recent quarters, according to the CRO.

Charles River said adding Citoxlab would boost earnings per share by $0.15 in 2019 and “at least $0.35” next year. Its guiding for revenue growth of 10.5% to 12% in 2019.

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