Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — Jefferies 2010 Global Life Sciences Conference
28 slides from Charles River Laboratories International's conference presentation, Jun 10, 2010
Slide 1: Charles River and WuXi PharmaTech: The First Global Early-Stage CRO
Charles River and WuXi PharmaTech: The First Global Early-Stage CRO Jefferies 2010 Global Life Sciences Conference JUNE 10, 2010 James C. Foster Chairman, President and CEO charles river (c) 2010 Charles River Laboratories International, Inc.
Slide 2: Safe Harbor Statement
Safe Harbor Statement This document includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "expect," "estimate," "plan," "outlook," and "projec
Slide 3: Non-GAAP Financial Measures and Additional Information
Non-GAAP Financial Measures This presentation includes discussion of non-GAAP financial measures. We believe that the inclusion of these non-GAAP financial measures provides useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, w
Slide 4: Charles River and WuXi: A Transformational Combination
Charles River and WuXi: A Transformational Combination o The combination creates the first fully integrated global early-stage contract research organization (CRO) o Offers a full range of products and services from molecule creation to first-in-human testing o Leverages increasing strategic importa
Slide 5: Timing of the Acquisition is Key
Timing of the Acquisition is Key o Critical inflection point in terms of rapid client consolidation and infrastructure reductions o Accelerating need for strategic outsourcing o ________ Clients are reducing the number of strategic partners to those with financial strength, scientific depth, global
Slide 6: Charles River Today
Charles River Today o A leading in vivo biology company o $1.20B in net sales (FY `09) o Unique portfolio of products and services focused on the research and development continuum for new drugs o A multinational company with ~8,000 employees worldwide o ~70 facilities in 16 countries o Continuous e
Slide 7: WuXi Today
WuXi Today o A leading chemistry company o $270M in net sales (FY09) o Service portfolio supports clients early with molecule creation, extending downstream through laboratory and manufacturing services o Largest China-based CRO with ~4,200 employees worldwide o One of the largest employers of chemi
Slide 8: WuXi Overview
WuXi Overview Headquarters o Shanghai, China Service Offerings o ________ Laboratory services, consisting of synthetic and medicinal chemistry, DMPK/ADME, biology, microbiology, in vivo pharmacology, toxicology, pharmaceutical development, analytical services, biopharmaceutical, in vitro and in vivo
Slide 9: WuXi Overview - History
WuXi Overview - History > Founded > Established Established Established Established Established discovery process research bioanalytical service biology chemistry development manufacturing services (BAS) operation and and FTE- services services operation analytical based development services service
Slide 10: The New CRL: Global Integrated Services
The New CRL: Global Integrated Services Discovery Preclinical Research Models and Services Clinical charles river 10
Slide 11: The New CRL Business Segments
The New CRL Business Segments 2009 Combined Sales*: $1.5B DS 15% RMS 44% PCS 41% DS: Discovery Services RMS: Research Models and Services PCS: Preclinical Services * Based on FY 2009 combined sales, with Charles River's DIS included in DS and WuXi's U.S.-based Laboratory Services included in PCS. Wu
Slide 12: The New CRL Business Portfolio
The New CRL Business Portfolio - --------------------------------------------------------------------------------------------------------------- Discovery Services Research Models and Services Preclinical Services - ------------------------------------------------------------------------------------
Slide 13: Drives Profitable Revenue Growth
Drives Profitable Revenue Growth o ________ Global outsourced discovery chemistry segment is estimated to be at least $2B in 2010, with a mid-teens CAGR over the next 3-5 years* o Currently ~20-30% outsourced o Growth in Discovery Chemistry and other downstream services accelerated by pharma outsour
Slide 14: Enhanced Top-Line Growth Potential by Business Segment
Enhanced Top-Line Growth Potential by 200 BPS '11-'13E Growth Potential Improved demand for models used in toxicology Standard ~2% average annual price increase Continued double-digit growth of In Vitro business - ------------------------------------------------- Demand improves as clients refocus s
Slide 15: Revenue Synergies
Revenue Synergies o ________ Cross-selling and combined sales force create incremental opportunity to drive more business upstream and downstream with existing and prospective clients based on unprecedented scope of early-stage portfolio o Increased presence and scale in the emerging China market o
Slide 16: Significant Cross-Selling Opportunities
Significant Cross-Selling Opportunities - --------------------------------------------------------------------------------- 1 Large Pharma Top 10 Top 5 Each Top 3 client ----------------- 2 Large Pharma Top 5 Top 10 5%-6% of combined '09 sales 3 Large Pharma Top 5 Top 5 - ---------------------------
Slide 17: Enthusiastic Client Response
Enthusiastic Client Response o ________ Senior management of CRL and WX each have reviewed the transaction with their respective top 20 pharmaceutical and biotechnology clients o Response has been overwhelmingly positive o Follow-up meetings have been scheduled/initiated o ________ Clients are viewi
Slide 18: Leverages Increasing Strategic Importance of China
Leverages Increasing Strategic Importance of China o Supportive of global pharmas who view China as the new frontier for drug development o Pharmas are taking advantage of cost leverage by placing chemistry in hina o Lower cost, highly skilled scientists with advanced degrees o Emerging opportunitie
Slide 19: The New CRL Revenue Base
The New CRL Revenue Base* Europe 22% North America 58% China 15% ROW 5% Leveraging the increasing strategic importance of China * Based on FY 2009 combined sales. WuXi's information is as disclosed in its Form 20-F filed with the SEC on 04/23/2010 and other public documents. charles river 19
Slide 20: 2011 Combined Financial Outlook
2011 Combined Financial Outlook(1) o Does not include the positive impact of expected revenue synergies from cross-selling and combined sales force o Increasingly accretive beyond 2011 (1) Combined financial information is presented as a supplementary non-GAAP financial measure, and is not intended
Slide 21: 2011 General Assumptions
2011 General Assumptions(1) o New debt of $950M o Existing term loan is repaid o Debt amortization begins in 4Q10 (after close) o Expect to accelerate repayment with cash flow o ~4.5% average interest rate on new debt o Term A rate expected to be LIBOR plus 275bps o Consolidated CRL non-GAAP tax rat
Slide 22: Synergies
Synergies Public company and corporate expenses o Reduction of Board, SOX, audit, legal, stock exchange, insurance and related expenses o Elimination of duplicative corporate overhead and support functions Other SG and A o Leverage greater purchasing power in vendor procurement relationships o Strea
Slide 23: Integration Planning Well Underway
Integration Planning Well Underway o Minimal business overlap simplifies integration process o Corporate integration team jointly headed by: o CRL: David P. Johst, EVP, Human Resources, General Counsel and CAO o WX: Edward Hu, COO o Nine operational sub-teams already established and meeting to devel
Slide 24: Management Continuity
Management Continuity o Top WuXi executives to join CRL management team (3-year employment agreements) o Ge Li, PhD: Corporate EVP and President, Global Discovery and China Services o Joins CRL Board, along with two additional directors chosen by WuXi o Founded WuXi in 2000; previously helped found
Slide 25: Cultural Fit
Cultural Fit o WuXi is a client-focused service organization o Excellent client retention o 100% retention of top 10 clients ('07-'09) o ~90% of WuXi's sales generated from US and European clients o WuXi shares CRL's employee-centric culture o Scientific depth and expertise differentiates CRL and Wu
Slide 26: Transaction Timeline
Transaction Timeline o Preliminary proxy statement filed June 1, 2010 o Voluntarily withdrew initial HSR filing June 8, 2010 and intend to re-file today (June 10) o Procedural step to provide the FTC with an additional 30 days to review o ________ Still on track to close by 4Q10, subject to approval
Slide 27: A Transformational Combination
A Transformational Combination o First fully integrated global early-stage CRO o Overwhelmingly positive response from top 20 clients o Creates opportunities for substantial revenue synergies due to unique portfolio and global footprint o Generates profitable revenue growth, driving long-term return
Slide 28: Accelerating Drug Development. Exactly.
Accelerating Drug Development. Exactly. CRL LISTED NYSE charles river (c) 2010 Charles River Laboratories International, Inc.
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