The US contract research organisation (CRO) saw revenue and operating income grow in the third quarter – up 21.8% to $425.7m (€383.5m) and 16.5% to $56.7m, respectively.
CRL’s discovery and safety assessment business made the biggest contribution generating revenue of $215.8m, an increase of 36.4% on the year-earlier quarter. The firm attributed the growth to its recent acquisitions WIL Research and Oncotest.
The firm’s research models business, which provides animals for drug toxicity testing, made the next biggest contribution. The unit brought in revenue of $120.9m in the quarter, an increase of 2.6%. The CRO said it had benefited from the impact of foreign currency translation.
Biologics manufacturing growth
CRL’s biologics manufacturing support business also saw gains.
The unit provides manufacturing services for small and large molecule drug developers, including cell line characterization, lot release testing and stability studies. The business generated revenue of $89m in the quarter, an increase of 21.4%.
CRL attributed much of the growth to higher demand for its biologics testing services and its microbial solutions businesses, which expanded last year after through the acquisition of Celsis.
Acquisitions
CRL also predicted that acquisitions – specifically, Blue Stream Laboratories which it bought in June and Agilux Laboratories which it added in September - would bolster its biologics manufacturing and services revenue.
CRL said: “Combining Blue Stream with the Company’s existing discovery, safety assessment, and biologics capabilities creates a leading CRO that has the ability to support biologic and biosimilar development from characterization through clinical testing and commercialization.”
Similarly it said Agilux – which provides small and large molecule bioanalytical services, drug metabolism and pharmacokinetic (DMPK) services, and pharmacology services – will expand its business with the biologics sector.
“The acquisition supports our strategy to offer clients a broader, integrated portfolio that provides services continuously from the earliest stages of drug research through the nonclinical development process.”
Growth of CRL’s biologics business was also reflected in its manufacturing costs, which increased $7.4m due in to “an increase in Biologics Costs resulting from the growth of the business and the Blue Stream acquisition.”
Analyst view
CRL’s growing manufacturing business, particularly its large molecule capabilities, was highlighted as a likely driver by a number of analysts.
David Windley from Jefferies said: “CRL has compiled a unique portfolio of services that remains unmatched by competitors” adding that the "Celsis acquisition is proving to be highly successful from a strategic and financial perspective. Blue Stream will help CRL fill a gap in bioanalytical and biosafety testing.”
John Kreger from William Blair said: “Manufacturing appears to have good sustainable momentum. As it outpaces the other two segments, it should also help lift consolidated margins.”