All right, good morning, everyone. I'm Tejas Savant, and I cover the life sciences sector here at Morgan Stanley. Before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, do reach out to your sales rep. It's my pleasure to host Charles River this morning, and speaking on behalf of the company, we have Chairman, President, and CEO, James Foster. Thank you, James, for joining us.
Pleasure.
Maybe just to kick things off, let's start with the biopharma funding environment. A lot of focus there. You know, you called out sort of a period of rapid and unexpected deterioration on the global side of things, you know, and you attributed it basically to the IRA and the patent cliffs. When we last spoke, James, you sort of called these changes as profound, right? And you have a lot of credibility in the space. You know, you've been at Charles River. I was checking when you joined; it's longer than I've been on the planet. So when you say something like that-
Don't, don't remind me.
You know, so, so people take note, right? So walk us through, you know, what changed, and what are you currently hearing from your customers?
It's an interesting tale of two cities, right? Last year, pharma was a source of significant growth, more than they had been for a while. Biotech has been driving our revenue growth for at least a decade, and pharma has always been an important client base, but last year was particularly strong. Then the sort of abrupt deterioration in demand this year, somewhat surprising. No one's really asked, but I think people are saying, "Well, how come you didn't know that that was gonna happen," right?
Mm-hmm.
Since we talk to these people daily. And the reality is that if a company's gonna dramatically reduce its kind of infrastructure and workforce and whatever, they're not gonna wear that on their sleeve. They're gonna plan for that for a substantial period of time, and then they're gonna execute it. And the folks that we deal with, which are often the head of R&D, pretty senior person, isn't necessarily participating in that. So was sudden. So we're seeing definitely hesitation and pullback on the part of big pharma, reduction in their infrastructure, reduction in their portfolios, some concern about a whole bunch of things.
Mm-hmm.
I think patents are probably the most significant. I don't-
Mm.
I don't know, but I don't think the election is necessarily a huge deal for them, and IRA is not new.
Mm-hmm. Mm-hmm.
This whole notion that the drug companies would work on less small molecules because of IRA is actually not true.
Mm-hmm.
They say that-
Mm-hmm
... but the reality is that whatever is druggable against the target, that's what they're gonna run with. So you still see a proliferation of small molecules. And biotech is very much tied to interest rates.
Mm-hmm.
Crazily tied to interest rates.
Mm.
You can feel it when we talk to them, what the Fed says and what happens to both our stock prices and what the clients say is quite interesting. So they're tied to that, and they're tied to access to capital markets.
Mm-hmm.
And so what's a little bit unusual about what's going on with biotech is that the funding is actually not bad. I think the first quarter this year was the fifth best quarter in the history of biotech. It feels like the last couple of months maybe weren't as good. So there-
Mm-hmm
... you know, I think biotech is quite off balance, right? You know, that there's a fair amount of volatility in their viewpoint on the spending patterns. Having said that, it's definitely improving, but more slowly than we had anticipated. You know, who knows?
Mm-hmm.
You know, I think at the end of last year, we thought the capital markets would come back strongly the back half of this year.
Mm-hmm.
Certainly doesn't look like that's happening.
Mm-hmm.
Certainly from an IPO or secondary-
Mm-hmm
... point of view, you can validate that. And so, they're quite cautious. I do think that as interest rates come down, which we'll see-
Mm-hmm
... and if the IPO market opens up, and if the election is relevant at all, and that's behind us, I, I do think there's an opportunity for biotech to-
Got it
... to accelerate.
Got it. So, James, how much of this is just customer psychology around, you know, access to capital down the road versus anything that you can see in their financials today?
I think a lot of it is psychology. I think, I think most of it is psychology. This, I mean, we, we've been having questions from our shareholder base for at least ten years, sometimes annoyingly, when biotech spending was at an all-time high.
Mm-hmm.
Every question I get, and every one-on-one, is, "When is that gonna slow down?
Mm-hmm.
So there's, you know, there's this sort of overwhelming concern that the rug is gonna get pulled out from under them, and capital is not gonna be available, and so I do think they worry about that a lot.
Mm-hmm.
You know, the science generally across biotech and pharma has never been this significant.
Mm-hmm.
You know, the modalities that we're dealing with are extremely exciting, and I think there are a lot of, potentially, very impactful drugs that have been parked... Sorry about my Boston accent, have been paused, and they want to get back to those as soon as possible. You have INDs that we know they want to file, that have been paused, and they-
Mm-hmm
... haven't filed the INDs.
Mm-hmm.
So we have a major emphasis in the clinic right now by biotech and pharma. But I do think it's very psychological, and it's sort of fed upon itself. Even as things have improved, albeit what I said about the first quarter, there's still concern about, well, what if it slows down next quarter? What if they raise interest rates again? Or what if the IPO market closes? Or what if the war in the Middle East blows up. Whatever.
Right. Right.
They're quite cautious.
Fair enough. On that note, I mean, would you be surprised if what you saw in June and July sort of percolates to other areas of the life sciences end market? I mean, one of the questions we get is, you know, are you the canary in the coal mine, or is it just that, you know, your assumptions at the start of the year were a little bit too optimistic versus what translated in terms of, you know, either these pipeline reprioritizations or the interest rate environment, and so on?
I mean, I think to some extent we are the canary in the coal mine. You know, to the extent that we talk to pretty much all, every pharmaceutical and biotech company, so with some regularity-
Mm-hmm
... both here and abroad. So when things heat up or slow down, we tend to hear about it, earlier. Now, we have a lot of questions about are we the canary in the coal mine, with discovery leading into safety.
Mm-hmm.
I think the issue there is that a lot of the drugs have been discovered, and as I said, I think they've been parked-
Yeah
-for a while. So, knowledge about that, I don't think is gonna be beneficial to us in terms of how we work with these folks. But there's clearly a lot of pent-up demand with both pharma and biotech. And, you know, the emphasis in the clinic is practical and logical to get drugs into the clinic and ultimately get them into the market. By the same token, you can't starve discovery and development for too long-
Mm-hmm
because then you have no future, you have no clinic-
Right
... you have no drugs in the market. And so for the last 10 or 12 years, at least as the world has occurred for us, some pretty balanced spending.
Mm-hmm.
Fair amount in both, you know, areas, and so not only has that been good for our business, but you've got this sort of plethora of stuff going into the clinic, so I do think that our clients, both large and small, are looking forward to getting back to that as soon as they can, and that's a different time frame for pharma than it is for biotech.
Got it. Perfect segue into my next question, more on the segment side of things, starting with Safety Assessment. You know, just given the diverging trends you called out, right? Pharma being incrementally softer, biotech softer, but still improving, and with the potential for one, maybe two rate cuts by year-end, and how tied that is to how they behave. Walk us through how that translates into, you know, just your book-to-bill metric, and at what point can we see the recovery there?
Yeah. You know, we've been eating through our backlog. So, you know, we had this extremely long backlog. It was eight- at least 18 months-
Mm-hmm
... which is sort of good news and bad news. It was great because we felt that we had some level of predictability. The problem with it was, clients were concerned about getting a slot, so they were booking slots, but not necessarily having the associated studies to go along with it.
Mm-hmm.
So I don't think that's a good thing.
Mm-hmm.
We're kind of back to, whatever, nine months, maybe 12 months. I think it's a much more rational situation. So they're booking slots with studies that are real, you know. So I do think that, you know, we have our gross book-to-bill is above one, our net book-to-bill is below. As we stop eating through the backlog, that's obviously gonna change. I mean, I can't tell you how soon that's gonna be, except to sort of reiterate the fact that biotech is improving, albeit more slowly than we had anticipated for the back half of this year, but we think it will continue to improve.
Mm-hmm.
It's a preponderance of our client base and revenue.
Mm-hmm.
And the question is, at what point does pharma come back strongly?
Right.
I think that's a bit of an imponderable. Feels like they... I mean, for us, the deterioration and the pullback was quite abrupt. I'm sure they were working on it for a long period of time, except for two companies that are making the GLP-1 drugs. It's almost every drug company, right, that's reducing their infrastructure, reducing their portfolio, and pausing. By the same token, they still have a lot of cash-
Mm-hmm
... and they are the folks that are buying biotech companies, buying the drugs, often buying preclinical or Phase I assets. So they're another source of funding, you know, we've said that for years.
Mm-hmm.
So the funding is coming in directly into the VCs, directly from the capital markets, but also from pharma. So I think that's an important element in the overall psychology, both for big pharma and biotech.
Got it. What fraction of your RFPs involve head-to-head bids? And what gives you the confidence that, you know, the head-to-heads that you're seeing on the safety testing side are attributable just to market dynamics versus share loss? And on a sort of somewhat related note, you've talked about, you know, having to offer deeper discounts on a case-by-case basis. Can you just talk about, you know, how the pricing environment continues to evolve there? And, you know, just what's the red line for you in terms of when you decide to walk away from a bid?
So the competitive scenario has changed dramatically over the last X number of years. And so, while we respect all of our competitors, they are much smaller.
Mm-hmm.
Including the largest one, is half our size, and then it gets very small from there. The principal ammunition that our competitors have is price. They don't have the depth of science, they don't have the geographic proximity that we have. They don't have a large portfolio of other services to offer, which I do think is really relevant to why we've been able to build our business so well.
Mm-hmm.
You know, ironically, even going back to 2022, which is only a year and a half ago, or a year and nine months ago, price was there for the taking-
Mm-hmm
and kind of the last thing clients asked about. So, I think a lot, some of the folks, we don't go head-to-head with at all. So if you're gonna go to China, you're probably not asking-
Mm-hmm
For a bid from us. You just want it cheap, and you're willing to risk the fact that maybe it's not the best quality work, and maybe they're not gonna help you with regulatory oversight. There are some clients that will be okay with it, it just being okay. This is good enough to get my IND filed, so they're okay with that. The reality is that people who know better, which is certainly all the big pharma companies and most of the more substantial biotech companies, want the quality of science that we have and want the infrastructure, and want us to be able to help them get it there. So pricing, we're very selective, we're very strategic, we're very surgical on that. If it's a new client, sometimes.
If we're trying to gain share or sometimes protect share, we will do that. If it's someone that will give us a study really soon, maybe. We have more pricing power with specialty toxicology than we do with general toxicology. By the same token, all of our competitors in the aggregate are smaller than we are, so there's just not much volume there, and they can't provide the services that we can. So we're at this really interesting point in time. We've been here before. This too will pass. It's not if, it's when.
Mm-hmm.
And it's classic supply-demand phenomenon that's going on here. So as pharma strengthens and as biotech gets more comfortable with the funding paradigm, the demand will increase, and so will pricing, and we won't have to do any discounting. So we do some of it, I think, appropriately and strategically, but we use it very thoughtfully.
Fair enough. So if prices stabilize exiting this year, will pricing still be a headwind to 2025?
Yeah. So we're, you know, we're booking studies now at lower price points-
Mm-hmm
... than they were a year ago.
Mm-hmm.
Some of those are gonna move into 2025. So, yes.
Mm-hmm.
I think prices are declining-
Mm-hmm
and we'll probably start the year with a pricing headwind.
Got it.
We'll do everything we can to get as much price as possible, but we'll be all about... We are always all about this anyway, but we'll be all about share gains at that point. And as I said, as the demand increases, that will shift. But yes.
Got it.
That's true.
Fair enough. Segment margins in DSA, James, I mean, in just in light of the sluggish demand environment, including on the discovery piece, the incremental price pressures we just spoke about, how are you thinking about that mid- to high-20s or 27 target for op margins in DSA?
We're thinking that, over the long term, that's certainly possible.
Mm-hmm.
Obviously, we have some pressure now-
Mm-hmm
with declining sales in DSA, and we're working arduously to streamline our costs, and lean out our costs, and do everything we can to protect margins. And I think that'll be our task for the foreseeable future, but I do think that, you know, we've been able to get increasingly more efficient in that business all the time, across multiple sites, with more digital capabilities, for instance, less manual activity, taking more white space out of the whole phenomenon, and we've been able to improve the margins nicely, so we'll be able to do that. I just can't tell you at what point.
Fair enough
... they'll accelerate again.
Got it. Switching to the manufacturing segment and specifically the CDMO business, right? Last year, when we had this chat, there were a lot of questions around, you know, Cognate and Vigene, and whether you'd bitten off more than you can chew. Since then, you know, the business has started to recover very meaningfully for you. Can you just give us an update on what proportion of those leads on the CDMO side are coming from your DSA segment today?
I mean, you know, we're doing everything we can to sell across the whole portfolio-
Mm-hmm
... right? I mean, that's the competitive advantage that we have. And so wherever the client enters-
Mm-hmm
There's an opportunity to hold on to them, and sometimes it goes backwards, and sometimes it goes forward. So I would say a lot of our clients are coming from discovery and from safety.
Mm-hmm.
Probably more from biologics than any other place for the CDMO business.
I see.
You know, the raison d'être that we got into the CDMO business was because the biologics business was so strong, and clients were saying, "You know, you're testing our drugs before and after they go into the clinic. We'd like you to manufacture them as well, because you're slowing us down by having us go outside to talk to somebody else and negotiate additional prices." So we're really pleased with that business right now. We've got some commercial clients-
Mm-hmm
-which is exciting. We have a host of new clients in the clinic, you know, the fact that we're making this big drug for Vertex, I think has sort of validated a lot of what we're doing, and I think folks have taken notice of that, and so, you know, cell and gene therapy is an important modality. The competition is limited, so I do think we have an opportunity to be, if not the leader, certainly a leader, and potentially the leader in this space, so gene-modified cell therapy production is something that it's going really well right now.
Got it. What's your backlog mix at the moment, you know, in light of this third client you highlighted, you know, receiving commercial approval between the commercial side versus, you know, clinical stage work? And does your existing backlog essentially give you confidence that, you know, cell therapy, which is an area of strength you highlighted, remains insulated from any sort of, you know, IRA-related headwinds, you know, reprioritization of work towards later-stage stuff?
Not sure if anything's insulated from anything, but, much more insulated than other things that we do. So, that work is all in the clinic.
Mm-hmm.
We're about to be commercial, they hope. And so, you know, as we talked about 15-20 minutes ago, there's a preponderance of focus and emphasis by the drug companies, large and small, in the clinic. And so getting a cell therapy or gene therapy drug into the clinic, even though there's only been, I think, less than 20 approved, it's not easy to get one of those drugs approved, but there's a lot of drugs both in the preclinical and clinical space that there's a lot of emphasis and focus and money being spent there. So I do think to that extent, if you want to use your parlance, it's somewhat insulated-
Mm-hmm
... because it's in that clinical space.
Mm-hmm.
Everybody thinks that the drug that they have in the clinic is gonna get to market, every single one of them, right?
Right.
We're talking to a fair number of them about what happens when it gets to market, and how much space will they need, and what the pricing paradigm will be, and what kind of gear do we need to manufacture it. And there's a fair number of those conversations right now, and a whole bunch of new clients that are in the clinic. So yeah, it feels like we have very good visibility and predictability about how that business will unfold for the balance of the year.
Got it. There's been, you know, a lot of talk about, you know, medium-term benefit from the onshoring of pharma supply chains in light of, you know, BioSecure or similar legislation. Is it sort of coming up very regularly in your funnel conversations now?
Yeah. A lot of talk about BioSecure Act. It would be extremely surprising if that isn't beneficial for us.
Mm-hmm.
So we anticipate that it will be. I've said publicly a couple of times that, you know, we have these large venture capital relationships.
Mm-hmm.
Two of our big venture capital partners have said that they've instructed their portfolio companies to not do business in China. So I thought that was quite interesting, right? They didn't suggest that they instructed them. So that was some concern about whether the legislation happens or not, there'll be continued tension between the U.S. and China, and maybe that's not a great place to do their work. Having said that, we have a trivial amount of conversation right now and a trivial amount of business that we've secured as a result of this.
Mm-hmm.
So we don't want to get ahead of our skis, but we do anticipate that it will be beneficial.
Got it. Switching to Microbial Solutions and Biologic Safety Testing, James. You know, those businesses did well in the last quarter. Why do you think the recent weakness you cited on pharma spending doesn't weigh on demand trends here, particularly for, you know, instrumentation on the microbial piece? And on the other hand, are you seeing signs of share gain from, you know, your Chinese competitor within BST in light of these BST concerns?
Yeah, so-
BioSecure concerns.
Yeah, I mean, those are totally different businesses, right?
Yeah.
So those businesses, you're doing quality control testing for drugs that are either going into the clinic or have been manufactured for commercial sale.
Mm-hmm.
So they're at a totally different part of the drug development spectrum, right? And so by law, they have to be tested, the microbial stuff in particular. And those in the biologics business was hampered a little bit by COVID, and so is microbial to some extent. So those businesses feel like they're back quite strongly. Margin profiles are very good in both of those businesses, one of them more than the other. We think that they'll have meaningful growth rates. We have some pricing power there, and from a technical, technological point of view, we are well advanced over our competition in the microbial business. The biologics business is an interesting one. We have four competitors who are at least our size or larger.
Mm-hmm.
We're all doing fine. There's just that much work. It's all large molecule work, and obviously there's a ton of large-
Right
... molecule work. So, we feel quite good about the future of those businesses.
Got it. Switching to RMS, you know, first on the Research Model side, I wanna zoom in on China. The RMS business there has been pretty resilient, you know, especially given some of the macro headwinds that the broader life sciences industry has seen in the region. What is the mix of small models versus NHPs in your Research Model business in China? And what do you think is insulating you from the softness in the region? Is it essentially the share gains that you've called out in the past, more than offsetting any pricing pressures?
Yeah, I mean, it's been a very good, continues to be a really good market for us. It's obviously a huge market.
Mm-hmm.
Competition is limited and entirely Chinese and not as sophisticated as they need to be, so they have a lot of fits and starts and problems. So folks that wanna do serious research will utilize Charles River. I mean, our prices are lower there, but so is our cost structure, so the margins are quite good.
Mm-hmm.
We continue to build new facilities, and as we build them, there's a pretty quick uptake, just in terms of demand. So, the preponderance of the work there is small animals and associated services. The NHP sales there are... That wasn't our original intention. You know, we own a small breeder over there. The intention was to get the NHPs into the U.S. and Europe for Safety Assessment work, and of course, the Chinese aren't letting the NHPs out of the country, so we sell them in-country. The numbers sort of fluctuate, and the quarters fluctuate, and it causes a little bit of lumpiness in the RMS business. In some ways I'd prefer if that stopped, and we could just use them entirely for our own purposes.
I don't see that China's gonna ever open up, though.
Got it. Fair enough. Sticking with animal models, on the NHPs, you've noted sort of the longer term nature of the Noveprim customer agreements and pricing being relatively stable there. Can you just give us a sense for how long these contract lengths are? How have customer conversations been with the ones that have come up for renewal since the acquisition? Is there a possibility of some price degradation there?
I don't, I don't think so. That's the best source of NHPs in the world and has been forever, so we're really pleased with that acquisition. It's a business that we intend to continue to grow. There are some preexisting contracts, as you say, which are good and bad.
Mm-hmm.
Good, because they generate revenue and the prices are good. Less good because we just prefer to use the animals ourselves for our own Safety Assessment work, which at some point we will. So the price points are quite good there, out in Mauritius.
Got it. I did apply to be site manager, you know, but you turned me down.
It is a beautiful place.
All right, so, switching to Research Services, just GEMS and Insourcing Solutions, James, how do you view the opportunity for both against the tougher macro backdrop, given the ability to drive efficiency for customers?
Yeah, I mean, those are two really important businesses for us and two really important services that have grown dramatically and actually have really good margins. So we always thought that they would be dilutive because the margins are so high on the, yeah, on the core animal business. If you think about the CRADL business, the Insourcing Solutions business, it's the most effective tool that a client can use if they're worried about cost structure, or recession, or CapEx, or whatever. So utilizing our space and our people to do their basic R&D work is really powerful. Our goal for that business is much larger.
If you think of that business on a see-through basis, that should see discovery work and safety work, and as the molecules progress, we should be able to to work on it all the way, all the way through our portfolio. And also, additionally to the work that we're doing now, where we're working with them to do their basic R&D studies, I think there's an opportunity to actually do the work for them instead of the drug companies doing it themselves. The other interesting thing about that Insourcing Solutions business, particularly the CRADL business, which we have. We have a lot of sites now because of the acquisition that we did a couple of years ago.
We thought all of our clients would be small biotech, and we have mid-sized biotech and big pharma companies who have either run out of space or don't want to build new space. They have taken significant amounts of space from us, so that's gonna be a very good business going forward on a worldwide basis. The Genetically Engineered Models business, that's one of the most effective and important research tools, 'cause you have animal models that replicate human disease conditions. Margins are very good in that business as well. I, you know, I think both of those businesses are a little bit stunted right now, just because of the softness in biotech funding.
Mm-hmm.
But they'll re-accelerate at some point.
Got it. And, do you still see room for margin improvement in RMS from that 25%-ish level?
We do.
Got it. Fair enough. On the margin point, I mean, you've announced some cost actions. Are you tracking to deliver the $100 million in savings this year? And then outside of headcount and site closures, what gets you to the $150 million in annualized savings you're targeting next year?
Yeah. So there's $150 million that we've identified, that will $100 we'll hit this year, and the balance will hit next year. There's some small site closures. There's you know 50, at least 50% of our costs are people, so there's workforce reductions as well. We're working now on sort of a multiyear plan, which we'll announce in November, which will be significant, and that will be more infrastructure consolidations, that'll be more digital work, that'll be more sort of offshoring.
Mm-hmm
... cost structures. That will be working on G&A. That will be a significant leaning out of the business, something that we should be doing all the time anyway, regardless of the demand on the top line. So we're quite confident we'll deliver the 150, that you can take that to the bank.
Mm-hmm.
We don't have a number yet for the larger multi-year situation, but we hope to have that, as I said, in.
... a couple of months. Got it. Would it be fair to say, James, though, that the multi-year plan will be less meaningful than the 150, just given the nature of what you're targeting there? Or could it-
I wouldn't say.
Okay. Okay, got it. So between these two plans, you know, is your target of achieving, you know, a hundred and fifty basis points of margin improvement by 2026 still on track despite the top line shortfall? Even if that, you know, that 6%-8% organic growth target seems to involve a pretty robust recovery in the next couple of years.
I think we have to take a step back and take a look at the world that we are-
Mm-hmm
... that we're living in now, which is different than the one we were living in when we said the 6-8% and the 150 basis points. And we'll recast those numbers at the-
Mm-hmm
... appropriate time, but so I think it's probably unlikely that we can make those numbers in the same timeframe.
Mm-hmm.
Having said that, you know, we've always been able to improve our operating margins, and they're one of the highest in the industry, and something we're always focused on at all levels in the company. We for sure will get back to that once we get a better bead on what the growth rate will be over the next three to five years.
Got it. You know, you recently implemented a $1 billion repo authorization. Are you still on track to begin the share repurchases by the end of the month? And then, how are you thinking about the ranking of your capital allocation priorities, the buybacks, the debt paydown, especially given the upcoming rate cuts and M&A?
We did buy back some stock already, as we indicated that we would, in the third quarter, to offset dilution from options. Look, capital allocation is something that we take quite seriously. We have a committee of the board that I'm on, that we looks at this at least five x a year.
Mm-hmm.
It's all math, right? And we try to get a balance between debt paydown. By the way, our leverage is coming down nicely. It's around two times now. So debt paydown, what we're gonna spend on capital, depending on the share price and interest rates and all of that, is buying back stock a smart thing to do? Is that an appropriate thing to do with the shareholders' money? We have always believed that strategic acquisitions are the best use of our cash. So I think we still believe that.
Mm-hmm.
We're focusing on some other things at the moment, like cost reductions, and trying to understand what the pharmaceutical industry is gonna do next year, and how we accommodate to that. But we definitely have a list of businesses that we would like to buy that would continue to enhance and expand our portfolio, and in ways that continue to distinguish us from the competition. So if you go back and look at the work that we've done, whatever, it's been 65 or 70 acquisitions, a lot of our growth rate has come from that-
Mm-hmm
... and our ability to compete more effectively. So, we look at all of those things all of the time. I mean, the things change constantly. You look at interest rates, for instance. I mean, it's changed the calculus on a lot of what we do. So, probably some of all of it-
Mm-hmm
... nuanced differently depending on what's going on in the world, what's going on with our company and the competition, and as I said, that we do that at the board level.
Got it. Any lessons as you sort of rev up that M&A engine down the road from the Cognate and Vigene sort of processes and integration?
Yeah. Well, I mean, the lesson is that the adjacencies are tougher than you think they are, and so that moving into the CDMO space was a logical and appropriate adjacency for us.
Mm-hmm.
I'm happy that we did it.
Mm-hmm.
It was way harder than we thought. It was new science. It was new to us, but it was new to everybody.
Mm-hmm.
It was new to science, it was new to the regulators, it was new to our clients. So, you know, in retrospect, I would've given us more time, and I would've talked to the shareholders about more time to integrate that business, and when it would be accretive. So I think you have to have an element of caution when you're moving into an adjacency, even if it fits like a glove.
Mm-hmm
... and is important. So, acquisitions that we've done, which is right down our alley, like when we bought a bunch of Safety Assessment businesses, we know that business. We are the largest player in that business, and so synergies, both cost and sales, are pretty straightforward, and how you manage them is quite different. So yes, assuming we move into another adjacency, we will be a bit more careful and give ourselves more time to integrate it.
Fair enough. To close, James, what do you think is the most underappreciated aspect of the Charles River story today? It's been a tough year for the industry in general. You've had, you know, uneven performance, but as you look to 2025, what would you really want investors to focus on?
I mean, yeah, the simple fact that we, notwithstanding the demand curve, which is less robust than we would like it, we have an extremely powerful portfolio. More powerful than any of our competitors, and there are no biotech companies that do any of the work that we do, so they don't have to use us, but they probably will. And pharmas, they outsource, well, as well. And so the situation that we're in now is not a long-term situation. It's not if this is coming back, it's when it's coming back.
Mm-hmm.
So we have to figure that out, we have to plan for that. And I think our shareholder base, the potential shareholder base, needs to understand that as well, that this is sort of a momentary pause in time, that we'll work through this, hopefully soon.
Perfect. Great place to leave it at, so thank you so much, James, for joining us.
Always, always a pleasure.
Appreciate it.