Kendle spends $215 million to become major clinical research player
pharmafile | May 12, 2006 | News story | Research and Development |Â Â Â
Kendle is to spend $215 million on buying the business of rivals Charles River, a move which the companys leaders hope will make it a major player in the lucrative contract research market.
Contract Research Organisations (CROs) first emerged in the mid 1980s when the pharmaceutical industry hit upon outsourcing clinical research work to external companies, allowing them to expand and contract capacity rapidly and use outside expertise.
By 2005, the CRO market was worth over $10 billion and is forecast to continue growing, albeit at a slower pace than before.
Most of the market's leading companies have combined organic growth with acquisitions to compete globally, and Kendle's acquisition is intended to confirm its place among the major players.
The company has bought most but not all of the Charles River business, spending its $215 million on acquiring its rival's phase II-IV clinical development services to create the world's fourth largest provider in this stage of drug development.
"We are excited by this move, which is an important component of our overall growth strategy designed to significantly enhance our global competitive position and accelerate Kendle to a $500 million organisation," said the company's co-founder and chief executive Candace Kendle.
"Our customers will benefit from our strengthened global project leadership capability, expanded therapeutic expertise in the fastest-growing areas of clinical development and enhanced depth in North America and a number of key European markets. We look forward to completing the integration of our new operations into Kendle under our four service brands, and adding value for our customers through our combined organisation."
The newly expanded Kendle will still be some way behind the biggest CROs, including Covance, probably the biggest in the field, with annual revenue of over $1 billion.
Charles River says it decided to sell its phase II-IV business units in order to focus on phase I and pre-clinical work
Charles River's chief executive James Foster said: "We believe that the market for outsourced preclinical services, particularly toxicology, continues to be strong, and we see emerging opportunities in vitro products, pre-conditioning services for research models, and early-stage clinical trials."
He said the new streamlined business model would support its long-term sales growth target of 11-12%, and earnings per share growth of 14 – 15%.
Charles River currently has a phase I facility in Edinburgh, which it says it will retain, but says it still hasn't decided whether to keep or sell on similar units in North America.
