The board of Charles River Laboratories has completed a strategic review of the company, deciding to cut costs and shift investments into animal testing alternatives and other potential areas of growth.
The CRO giant plans to shed “underperforming or non-core” parts of its business that account for about 7% of the company’s projected 2025 revenue, Charles River announced in a Nov. 5 release.
The company will also launch initiatives to improve operational efficiency, with the goal of saving about $70 million per year by 2026. This includes process improvement, procurement synergies and enacting a global business services model, the company added.
At the same time, Charles River will invest in growth areas such as bioanalysis and new approach methodologies (NAMs), which are alternatives to animal testing, as well as efforts to expand the organization’s geographic presence. NAMs include tools like organoids, organs-on-chips and computer models that simulate biology.
Asked which business units may be sold or whether layoffs are explicitly planned as part of the new strategy, a Charles River spokesperson told Fierce Biotech that “the execution of this plan is still in the early stages.”
“The actions outlined today will better position us to drive meaningful earnings growth and further strengthen the company to benefit both our shareholders and our clients,” James Foster, Charles River’s chair, president and CEO, said in the release.
The new plan debuted on the same day that Charles River announced its third-quarter earnings, revealing organic revenue, which excludes the impacts of divestitures and currency fluctuations, dropped 1.6% from the third quarter of last year. This decline was driven by losses in the company’s discovery and safety assessment and manufacturing solutions units, while the research models and services section jumped up 6.5% in organic revenue compared to 2024’s third quarter.
“We believe that positive signals are beginning to emerge which indicate that the industry may be on a path towards recovery,” Foster said in the earnings release. “We believe it is critical to remain intently focused on our strategy to further differentiate ourselves from the competition through our science and our innovative solutions, implement additional initiatives to unlock value, and gain additional share of our clients’ drug development and manufacturing programs.”
Charles River announced the strategic review, done in partnership with its largest investor, Elliott Investment Management, in May. That announcement also aligned with an earnings release, with the CRO reporting first quarter organic revenue had dipped 1.8% year-over-year, part of a steady decline during which the company has responded with layoffs and site closures.
The research outfit’s investment in NAMs comes as no surprise; Charles River’s interest in animal testing alternatives predates the second Trump administration, but the vocal support for NAMs from the federal government this year has reinvigorated the CRO’s efforts.
Charles River tapped Namandjé Bumpus, Ph.D., former principal deputy commissioner of the FDA, to lead a scientific advisory board guiding NAM strategy in October. The company is also an active participant in the Validation and Qualification Network, an initiative of the Foundation for the National Institutes of Health that brings together industry and regulators to help get the most promising NAM technology across the regulatory finish line.