Charles River Bolsters QC Business With $212 Million Acquisition of Celsis

Astellas Pharma, Proteostasis Therapeutics Forge $1.2 Billion Genetic Disease Drug Development Pact

July 9, 2015
By Alex Keown, BioSpace.com Breaking News Staff

WILMINGTON, Del. – Charles River Laboratories will bolster its microbial detection business with the $212 million acquisition of Celsis International Ltd., the company announced this morning.

Charles River said it expects the acquisition of Celsis, a provider of rapid microbial detection systems for quality control testing in the biopharmaceutical and consumer products industries, to make its Endotoxin and Microbial Detection business a “one-stop-shop” for rapid quality control testing. By offering rapid QC testing for both sterile and non-sterile applications, Charles River can serve as a single provider for clients seeking a complete solution for quality control testing services, the company said this morning.

“We’re much stronger together than we are as individual companies,” Foster Jordan, vice president of Charles River’s EMD division said Thursday afternoon.

Jordan said the two portfolios of both companies will be complementary to each other and will require some cross training of sales force to effectively market the product lines from both businesses. Charles River’s products are more pharmaceutical in nature, while Celsis handles products in the health and beauty segment of the market, he said.

Because the products are complimentary, Jordan said he does not expect any changes to employment to occur due to the acquisition. With Celsis’ manufacturing operations in Europe, Jordan said they currently do not see any need to combine manufacturing facilities.

Charles River’s EMD business is a provider of endotoxin testing for sterile biopharma applications, such as. injectable drugs and medical devices, and offers a comprehensive testing platform for the company’s clients. Celsis is a provider of rapid testing systems for non-sterile bioburden applications, including pills, ointments and detergents, which makes it an “excellent fit” with Charles River’s EMD, the company added.

The combination of Charles River and Celsis will “drive significant value for our clients’ in-process and product release testing needs across a broad range of microbial detection applications,” the company said in a statement. Rapid testing methods for quality control are important cost savings initiatives for many companies. Charles River said the addition of Celsis will increase the speed and efficiency of sterile and non-sterile applications. The company said Celsis’ systems have processed more than 100 million assays. Celsis’ technology has significantly reduced testing time to between 18 and 48 hours, compared to three to seven days required for conventional testing, Charles River said.

Charles River said the addition of Celsis, with its Advance II, Accel and Innovate systems, will complement the company’s recently introduced PTS-Micro, a rapid bacterial detection system for biopharmaceutical applications.

The acquisition of Celsis will nearly doubles Charles River’s EMD market opportunity to approximately $2 billion, the company said.

Celsis’ revenue growth is expected to remain in the low double-digits for the foreseeable future, Jordan said. Charles River expects to generate “modest operational synergies” as a result of the acquisition, with benefits totaling approximately $2 million over the next year, he added. The acquisition is expected to give a modest five cents per share boost to earnings this year and increase to 15 to 20 cents per share next year.

The deal is expected to be completed in the third quarter of this year.

The acquisition of Celsis fits in with M&A plans Charles River announced earlier this year. In February, speaking at the Leerink Swann Global Healthcare Conference, James Foster, chief executive officer of Charles River Laboratories, indicated the company was actively looking for merger and acquisition targets in 2015. In February Foster said Charles River was already in “serious conversation” with some companies about possible mergers or acquisitions.

“We’ll be disappointed if we don’t get some meaningful M&A done in 2015,” Foster said at the time.

Jordan said the acquisition of Celsis completes the “total solution” for EMD’s offerings. He said he is unaware of any future acquisitions for his division, but said he was unsure if the two other divisions of Charles River Laboratories had any M&A in the works.

In 2012 Celsis sold off its Celsis Analytical Services division to North Carolina-based AAIPharma Services Corp. Celsis Analytical Services performs material testing services for the pharmaceutical, biotechnology and manufacturing sectors.


As New Jersey Biotech Booms, Will It Overtake Other States As Prime Location?
A week after Celgene Corporation announced it is officially the mystery buyer of Merck & Co. ’s former 1 million-square-foot R&D site in Summit, N.J., it quickly became our most popular story last week.

The company announced last Wednesday that it is buying the space, ending months of speculation about what Big Pharma company might move into the neighborhood.

The Summit, N.J. site is zoned research/office. The New Jersey site would put operations closer to some of the major biotech and pharmaceutical hubs on the East Coast.

But, by far, the most tempting part of doing business in the state remains New Jersey’s operating tax credit, which allows companies to sell their net operating losses to the New Jersey Treasury. One of the state’s most recognizable biotechs, Celgene, used the program until it became profitable, which was key to it staying in the state, said local officials.

That has BioSpace is wondering if New Jersey is becoming the new face of biotech. What do you think? Can the Garden State compete with other longtime stalwarts like California or Boston?

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