Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — J.P. Morgan 28th Annual Healthcare Conference (January 2010)
31 slides from Charles River Laboratories International's conference presentation, Jan 11, 2010
Slide 1: J.P. Morgan 28th Annual Healthcare Conference
J.P. Morgan 28 Annual Healthcare Conference JANUARY 13, 2010 James C. Foster Chairman, President and CEO Thomas F. Ackerman Executive Vice President and CFO Co charles river © 2010 Charies River Laboratories Intemational, Inc.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Caution Concerning Forward-Looking Statements. This presentation 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,” “ex
Slide 3: Charles River: accelerating drug development. exactly.
Charles River accelerating drug development. exactly. Strategically partnering with our clients to provide essential products and services that expedite drug development 3
Slide 4: Charles River Snapshot
Charles River Snapshot A leading in vivo biology company $1.22B in net sales (LTM 9/09) Unique portfolio of products and services focused on the research and development continuum for new drugs A multinational company with ~8,000 employees worldwide ~70 facilities in 17 countries Continuous expansio
Slide 5: Global Solutions
Global Solutions Providing drug discovery and development expertise in North America, Europe, Japan, China Existing Pharma / Biotech Cluster Emerging Market We are where our clients are 5
Slide 6: CRL Value Proposition
CRL Value Proposition Partnering with Charles River reduces clients’ R&D costs and improves efficiency and speed Supports increasing virtualization of Big Pharma Lower staff and operating costs Using our facilities and staff instead of their own Reduces the need for them to invest in infrastructure
Slide 7: Attractive Market Opportunities
Attractive Market Opportunities Charles River is the outsourcing market leader from discovery through first-in-human testing RMS CRL Harlan-RMS CVD Taconic Market Size*: ~$7.0-7.5B (2009E) Jackson Long-term market growth: Other Estimated in the PCS high-single digits LSR MPI SNBL WIL Harlan-CRS Leve
Slide 8: Our Role in Drug Development
Our Role in Drug Development Our unique portfolio is focused on providing products and services across the in vivo discovery > development > first-in-human continuum IND NDA Single Compound i i i Discovery Developmen Fundamental Research Preclinical Services Clinical Services & Discovery Co 8 charle
Slide 9: RMS Franchise
RMS Franchise The market-leading provider of research models and services to support their use in research Models are essential to the drug discovery and development process Stable demand for products and services Exceptional operating margin and free cash flow generation Even in this challenging ma
Slide 10: Research Model Production
Research Model Production » Global leader in breeding and distribution of research models = Largest selection of the most widely used strains in the world = 4 of every 2 models sold anywhere in the world comes from Charles River » Strategically located in close proximity to clients = 17 facilities i
Slide 11: Research Model Services
Research Model Services » Charles River is the premier provider of services which support the use of research models in discovery / development of new compounds » Genetically Engineered Models and Services (GEMS) = Market-leading contract breeding and associated services for clients’ genetically eng
Slide 12: Discovery & Imaging Services (DIS)
Discovery & Imaging Services (DIS) We are now one of the largest providers of non-GLP efficacy testing Acquired MIR (Sept. ‘08) to add extensive in vivo imaging capabilities and enhance therapeutic area expertise in oncology and inflammation pharmacology Acquisition of Piedmont Research Center (May
Slide 13: Endotoxin and Microbial Detection (EMD): Endosafe-PTS
Endotoxin and Microbial Detection (EMD): Endosafe®-PTS™ Investment in alternatives to in vivo testing The only FDA-approved in vitro non-clinical test Used for lot release testing of medical devices and injectable drugs PTS (Portable Testing System) is a significant advance over existing technology
Slide 14: Preclinical Services
Preclinical Services Providing clients with expertise for integrated drug development Regulatory and process consulting Efficacy studies Safety studies including general and specialty toxicology Inhalation, infusion, developmental and reproductive, juvenile / neonatal, ocular, bone, immunotoxicology
Slide 15: BioPharmaceutical Services (BPS)
BioPharmaceutical Services (BPS) A market-leading provider of services to support the development and manufacture of biologics Global footprint of four sites in North America and Europe Expect to continue to develop this business to support the increasing proportion of biologics in the drug developm
Slide 16: Strategic Initiatives
Strategic Initiatives Using this period of softer market demand to streamline internal operations and align our business portfolio to client needs Four distinct pathways: Acquisition of strategic assets and other alliances Restructuring and realignment of our PCS business operations and sales organi
Slide 17: Portfolio Expansion
Portfolio Expansion Charles River has historically driven growth through a combination of internal development and strategic bolt-on acquisitions ~30 acquisitions since ’89 Expanding our breadth of services as clients continue to identify capabilities as non-core Identifying strategic acquisitions a
Slide 18: Portfolio Expansion - Technology
Portfolio Expansion - Technology Acquired Systems Pathology Company, developer of Computer Assisted Pathology System (CAPS™) A unique use of analytical smart-imaging software technology to increase efficiency of pathologists CAPS™ fully automates labor-intensive processes Frees pathologists to focus
Slide 19: Business Changes: PCS Reorganization
Business Changes: PCS Reorganization Implemented in 2Q09 Enhances our ability to provide clients with a centralized , integrated global approach to their drug development programs Enables us to manage global operations centrally Dual accountability structure provides both global functional managemen
Slide 20: Business Changes: Sales Realignment
Business Changes: Sales Realignment Key structural element in our ability to enhance client service and gain market share Migrating to a sales approach focused on solutions tailored for individual and global clients More comprehensive coverage of all market segments Diverse client population require
Slide 21: Business Changes: Sales Realignment (cont.)
Business Changes: Sales Realignment (cont.) = Mid-market pharma and biotech clients supported by a combination of account managers with broad portfolio knowledge and specialists with specific scientific expertise Tin PCS: Sales Specialists | | \_] | Discovery: Sales Specialists | TO Phase 1: Sales S
Slide 22: Process Efficiency Initiatives
Process Efficiency Initiatives Driving efficiency and profitability through Six Sigma and ERP Strengthening Six Sigma organization Continuing to ramp up, with 100 projects underway and more in the pipeline Achieved modest efficiency gains in ’09, and expect more significant gains in ’10 Successfully
Slide 23: PCS Massachusetts
PCS Massachusetts Announced decision to suspend operations of PCS Massachusetts to improve global PCS capacity utilization Decision based on surplus industry capacity Slowdown in demand from East Coast biotechs Cost structure of PCS-MA exacerbated by current pricing Leaner PCS infrastructure will im
Slide 24: Drivers of Market Rebound
Drivers of Market Rebound Major mergers are closed, which should galvanize the pharmaceutical industry Pfizer-Wyeth on 10/15/09 and Merck-Schering on 11/04/09 Expected to quickly implement integration plans With clarity on mergers, pharmaceutical industry expected to refocus on driving therapies thr
Slide 25: Drivers of Market Rebound
Drivers of Market Rebound Our continuing discussions with senior heads of R&D of our large pharma and biotech clients reinforces the desire for enhanced strategic outsourcing Continuing to identify additional areas of expertise as non-core Want broader and more innovative strategic relationships wit
Slide 26: 2009 Guidance/2010 Outlook
2009 Guidance/2010 Outlook Reaffirming 2009 sales and expect non-GAAP EPS to be above the range* Limited preclinical visibility persists, but continue to believe that demand will begin to improve in 2Q10 4Q09 PCS business trends consistent with our expectations Strategic discussions with clients Sta
Slide 27: 2009 Guidance/2010 Outlook (cont.)
2009 Guidance/2010 Outlook (cont.) New RMS catalog and pricing effective 1/1/10 Anticipate RMS will benefit from increased NIH funding Expect to provide a more detailed outlook with ’10 guidance on February 8th 27
Slide 28: CRL Investment Thesis
CRL Investment Thesis Operating efficiency and improved capacity utilization to drive longer-term margin improvement Productivity and efficiency gains through IT investment and Six Sigma Operating margin target >20% Strong balance sheet / conservative capital structure $215M of cash and marketable s
Slide 29: Accelerating Drug Development. Exactly.
Accelerating Drug Development. Exactly. © 2010 Charles River Laboratories International, Inc.
Slide 30: Appendix
Appendix 30
Slide 31: Reconciliation of Last Twelve Months (LTM) Net Sales
CHARLESRIVER LABORATORIESINTERNATIONAL, INC. RECONCILIATION OF LAST TWEL VE MONTHS(LTM) NET SALES @olhrsin thousands) ‘Net Sales Fiscal Year Ended December 27, 2003 Nine Months Ended September 26, 2009 Nine Months Ended September 27, 2008 Last Twelve Months (LTM) Ended September 26, 2009 Churks Rive