Charles River Acquires Cellero for its HemaCare Business
Charles River Acquires Cellero
In August, CRL acquired a small firm, Cellero, headquartered close to Boston for USD 38m. Cellero brought a geography presence to HEMA (which is based in California). It also had “immobilized cells, which are immunocompromised cells from immunocompromised patients and some stem cells”. Readers with a medical background will understand this better than we currently do.
Cellero Becomes Part of HemaCare
Back in January 2020, Charles River Labs had acquired HemaCare (HEMA) for USD 380m, offering a 27% premium above HemaCare. The amount, USD 380m, seemed enormous for a company with H1 2019 revenues of USD 19m. However, HEMA was a high-growth firm with revenues up 48% in H1 2019. It also was very profitable (with an H1 2019 EBIT margin of 21.2%).
HEMA was a producer of human-derived cellular products, i.e., human cells used in therapy development. The company increased by 50% the revenues of CRL in this area. It became part of CRL’s Research Model & Services (RMS) unit. It complemented nicely RMS, which had a more rodent-centric business.
Pharma Outsourcing Is the Future for ER&D
We think that the future of the ER&D services industry lies, along with digital manufacturing, in servicing the pharmaceutical industry. However, the expansion is not going to be easy. ER&D vendors and pharma-focused contract research organizations (CROs) operate in two very different fields. Charles River Labs (CRL) works at the pre-clinical R&D and is the leader in this space.
The strategy of CRL is be present in the full pre-clinical studies lifecycle. Its core activity in the laboratory support services. It is, however, present, early in the lifecycle with RMS. It also has its Manufacturing Support business, which is a biopharma product testing business. To make an analogy with the ER&D industry, CRL supplies part of the required modeling hardware and software required, helps with the execution, and also provides testing.