After promising to sell off 7% of its business back in November, Charles River Laboratories has delivered. The CRO is offloading its entire contract manufacturing operation and some of its European discovery service assets, which brought in a combined $287 million in revenue last year.
The CDMO business is being shipped to GI Partners, while the discovery assets are headed to CRO rival IQVIA, Charles River announced in a Feb. 25 release.
“We have decided to divest these assets after carefully evaluating our core capabilities and determining those that will drive the most synergistic growth with our broader portfolio going forward,” James Foster, Charles River’s outgoing president and CEO, said in the release. “We believe these actions will refine and further strengthen our portfolio, and will also enhance shareholder value by executing on our plans to drive long-term growth, greater efficiency and operational excellence.”
While the unloading will hurt Charles River’s revenue in the short term, “the transactions are expected to improve profitability” over the long run, analysts from Evercore ISI wrote in a Feb. 25 note.
“In addition to sharpening CRL’s portfolio, the cash generated from these sales will likely be used for additional M&A in high-growth/margin areas,” the analysts added.
The CDMO sale includes sites in Tennessee, Maryland and the United Kingdom, as well as a cell therapy manufacturing site in California. The Maryland CDMO site was already slated to be closed, with 20 employees laid off, as part of the CRO’s strategic pivot.
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A site responsible for research model production in Massachusetts was also already impacted, with 70 employees laid off and a relocation announced about a week after the strategic shift was unveiled in November.
To get its hands on some of Charles River’s discovery assets, IQVIA is paying $145 million, according to the release. The purchase includes five sites specializing in in vitro drug discovery, animal testing alternatives and AI-powered small-molecule discovery, IQVIA said in its own Feb. 25 announcement of the acquisition.
These European sites are in Cambridge and Portishead, U.K., along with Freiburg, Germany; Kuopio, Finland and Leiden, Netherlands, Charles River said.
While some work on alternatives to animal testing is being sold to IQVIA, the field of new approach methodologies or NAMs remains a key focus for Charles River moving forward. The CRO launched its Alternative Methods Advancement Project back in April of 2024, and last year tapped FDA veteran Namandjé Bumpus, Ph.D., to lead a scientific advisory board guiding its NAM goals.
But current chief operating officer and soon-to-be CEO Birgit Girshick told Fierce in January that the move away from animal testing is “definitely an evolution and not a revolution,” and Charles River is far from giving up on animals entirely. The company recently announced plans to buy Cambodian primate supplier K.F. for roughly $510 million.
