Charles River To Suspend Preclinical Ops in MA

Charles River Laboratories has decided to suspend operations at its Preclinical Services (PCS) facility in Shrewsbury, MA by mid-2010, once ongoing studies are completed. The company intends to resume operations when preclinical market conditions improve.

Suspending operations at the facility is expected to cut costs by approximately $20 million in 2010, with an annualized run-rate of approximately $25 million. The company expects to record charges of approximately $7 million, primarily in 1Q10, for severance and related costs. As a result of the decision, the company anticipates some loss of revenue in 2010, but expects to retain the majority of the business and provide the services at other PCS sites.

James C. Foster, chairman, president and chief executive officer said, “Based on fourth-quarter preclinical business trends consistent with our expectations and positive early indications for the first quarter, we continue to believe that the preclinical market will begin to show some improvement in the second quarter of 2010. However, the extended softness in preclinical market demand for the last fifteen months has resulted in excess capacity throughout the contract research industry and in our own global network of PCS facilities. We have thoroughly evaluated the anticipated demand and our available capacity, and determined that the leaner infrastructure will improve our PCS operating margin while providing us with sufficient capacity to meet the expected upturn in demand for preclinical services in the biopharmaceutical industry.”