In response to decreased demand for preclinical services, Charles River Laboratories is halting operations at its Shrewsbury, Mass., preclinical services facility by the middle of 2010, once on-going studies are completed. The contract research organization (CRO) said it plans to resume operations when the global preclinical market improves.
Suspending operations at the facility is expected to save Charles River $20 million in operating costs in 2010. Although the closure will result in some loss of revenue, the company said it expects to maintain the majority of the business through other preclinical services sites. The CRO will pay approximately $7 million in the first quarter for severance and related costs.
“The extended softness in preclinical market demand for the last 15 months has resulted in excess capacity throughout the contract research industry and in our own global network of [preclinical services] facilities,” said Charles River president and CEO James Foster in a statement. “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.”