Charles River inks agreement to divest CDMO, cell solutions businesses to GI Partners

Charles River Laboratories on Wednesday announced it has signed a definitive agreement with private investment firm GI Partners to sell its contract development and manufacturing organization (CDMO) and cell solutions businesses.

Under the deal for primarily future and contingent performance-based payments, Charles River is selling its CDMO sites in Tennessee, Maryland, and the United Kingdom, as well as a cell solutions site in California.

The transaction, expected to close in the second quarter of 2026, involves Charles River’s CDMO business — which provides production services for gene-modified cell therapies, as well as gene therapies including viral vectors and plasmid DNA — and its cell solutions business which provides human-derived cellular materials used in the development and production of cell therapies.

“We have decided to divest these assets after carefully evaluating our core capabilities and determining those that will drive the most synergistic growth with our broader portfolio going forward,” Charles River CEO James Foster said in a statement.

The businesses generated combined annual revenue of $143 million in 2025, including $117 million in its manufacturing solutions segment and $26 million in the research models and services segment, according to the announcement.

In the fourth quarter of 2025, organic revenue for Charles River’s manufacturing solutions segment decreased 2.1% driven by weakness in its CDMO business. For the full year 2025, Charles River reported the manufacturing segment’s revenue declined 1.6% on an organic basis.

Foster in an earnings call last week said the lower Q4 and full-year growth rates for the manufacturing segment “were primarily driven by lower CDMO revenue, principally the result of the loss of one commercial cell therapy client whose revenue declined by nearly $25 million in 2025.”

Earlier this month, Charles River said it is closing a cell therapy CDMO site in Hanover, Maryland. In 2021, the company purchased the Hanover facility as part of its $875 million acquisition of Cognate BioServices, along with gene therapy CDMO providers Cobra Biologics and Vigene Biosciences. Charles River has been working to adapt its cell and gene therapy CDMO strategy amid a shifting market environment. 

Last month, Foster gave a presentation at the 2026 J.P. Morgan Healthcare Conference noting that Charles River in 2025 conducted a “deep” strategic review of the company’s entire portfolio with the decision to divest some “non-performing” businesses.

“Those are businesses that we obviously liked,” Foster said. “We thought they had great promise. I think you have to step up to those things when that doesn’t work out. These businesses are a big-time headwind to our operating margins.”

Discovery services assets divestment

Charles River has also signed a definitive agreement with IQVIA to divest five European sites in its discovery services business for about $145 million in cash, with the potential for up to $10 million in additional milestone-based payments. 

The Cambridge, UK site provides in vitro drug discovery services that primarily include medicinal chemistry and structural biology services, while four other sites — Freiburg, Germany, Kuopio, Finland, Portishead, UK, and Leiden, Netherlands — offer pharmacology services primarily in the areas of oncology, neuroscience, immunology, and advanced cell biology.

Charles River said all the planned divestitures announced on Wednesday are expected to reduce reported revenue by slightly more than $200 million in 2026, including more than a 50-basis-point reduction to organic revenue growth guidance. Collectively, these businesses generated $287 million in revenue in 2025, according to William Blair analysts. 

“While we are a bit surprised to see the divestment of 60% of the company’s discovery business, we believe the decision makes strategic sense and will allow the company to focus on its core preclinical business while also reducing the company’s exposure to discovery, which is the area most vulnerable to near-term disruption by AI,” the analysts wrote in a note to investors.