Charles River to acquire WuXi for $1.6 billion

Charles River Laboratories, a Wilmington, Massachusetts-based drug research company, has signed an agreement to acquire a Chinese pharmaceutical contractor for about $1.6 billion.  Charles River is acquiring WuXi AppTec, a Chinese pharmaceutical outsourcing services provider. A merger of the two will further cement Charles RiverÔÇÖs position as one of the worldÔÇÖs biggest pharmaceutical outsourcing services and research companies. The combined company, which will retain the name Charles River, will offer an expanded portfolio of products and outsourced services to multinational pharmaceutical, biotechnology and medical device companies and academic and government institutions who are increasingly seeking to access early-stage drug development expertise. Founded in 1947, Charles River is one of the worldÔÇÖs largest providers of animals for lab testing. It had about $1.2 billion in revenue and $114.4 million in net income last year. The company has about 8,000 employees working from facilities in the US, Europe and Japan. The company has also established a presence in China with a toxicology and drug-testing facility in Shanghai. WuXi, founded in 2000, is a leading pharmaceutical, biotechnology and medical device R&D outsourcing company. It had revenue of $270 million last year and counts pharmaceutical giants such as Merck & Co. among its customers. It has around 4,000 employees, with offices mainly in China. In 2008, it acquired AppTec Laboratory Services for about $151 million. Commenting on the deal, James C. Foster, chairman, president and chief executive officer of Charles River, said: ÔÇ£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. ÔÇ£We regard this as a transformational transaction that sets a new standard in the outsourced drug development services industry. For the first time, our existing and potential clients will be able to obtain support for their early-stage drug development needs from one company with unparalleled scientific depth and breadth in chemistry and biology.ÔÇØ Dr. Ge Li, chairman and chief executive officer of WuXi, said: ÔÇ£This combination represents a true win-win scenario that significantly expands the global reach and growth opportunities for both companies. ÔÇ£As a result of this transaction, Charles River will be able to immediately expand its presence in China and avail itself of WuXiÔÇÖs expertise in chemistry services, while simultaneously, WuXi will be in a position to accelerate its good laboratory practice (GLP) toxicology capabilities. Together, we will offer our clients unparalleled support to meet their early-stage drug development needs.ÔÇØ Laboratory outsourcing companies have gained prominence as big drug-makers increasingly turn them to help cut costs. Consolidations have increased in recent months as the global market for biopharmaceutical products, medical devices and diagnostics improves. As a result of the merger, Charles River expects to achieve savings and synergies of approximately $20 million every year from 2011.