Charles River touts first-quarter manufacturing revenue, says China bill is ‘net positive’

Charles River Laboratories’ manufacturing arm delivered a large revenue jump in the first quarter of the year owing to an uptick in customer activity.

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Clik here to view.James Foster

The company also noted that it expects to benefit from the Biosecure Act. “We are an alternative for folks that either can’t or don’t want to continue to do their work in China. So, I think directionally it is something positive to watch. We would be surprised if it doesn’t have a benefit to us,” CEO James Foster said during its Thursday morning earnings call.

Its manufacturing business, consisting of CDMO, microbial solutions and biologics testing services, jumped by 10.7% in the first three months of 2024 to $185 million, compared to the $167.3 million it reported in the same period last year, according to a Thursday press release. The increase was driven by a rise in orders for its microbial solutions and biologics testing services, the company said in its earnings presentation.

But Jefferies analysts viewed Charles River’s overall Q1 results as “mixed.” While its manufacturing revenue increased, its largest business unit — discovery and safety assessment — dropped by 8.6% to $605.5 million in Q1 compared to $662.4 million last year. In total, the company said it had $1.01 billion in revenues in the first three months of 2024, down 1.7% compared to last year’s $1.03 billion.

While cautioning that the Biosecure Act’s impact is yet to be fully determined, Charles River said that it expects the bill to be a “net positive” for the company if it passes. Around 95% of its revenue comes from the US and Europe.

The Biosecure Act would restrict US biotechs from working with China-based service providers, such as WuXi AppTec. Other WuXi competitors have also called the bill a potential business opportunity.

Meanwhile, Charles River expects biopharma funding to ramp up, positively impacting its early-stage services this year. The company has already seen an overall increase in “proposal activity” in Q1, according to its presentation.

While Charles River doesn’t expect a huge increase in customer demand straight away, it noted “we have available capacity to start certain types of work relatively quickly.”