Charles River Laboratory (NYSE:CRL) was one of the notable losers in the S&P 500 on Wednesday after the non-clinical contract research organization announced that a recent Justice Department indictment against one of its suppliers will affect the NHP supply of this institution. essential tool for preclinical studies.
The matter comes after the US Department of Justice criminally charged two officials and a supplier of non-human primates ((NHP)) from Cambodia, the leading supplier of such animal models to the United States. Ky and Charles River (CRL).
The company said that despite global supplies, with the indictment and subsequent announcements by the Cambodian government, it anticipates supply will be limited for NHPs importing from that country into the United States.
However, despite the disclosure, CRL stock fell even after Wells Fargo analyst Timothy Daley argued the company would likely benefit from the incident, given its pricing power and position market leadership.
“…we see this as a potential benefit for preclinical CROs who are not exposed to secure supplies due to increased stakes and increased pricing power, most notably Charles River (CRL),” Daley wrote, adding that the supplier in question represented 45% of total NHP imports into the United States in 2020.
In light of a significant supply-demand mismatch, this event has the potential to impact preclinical CRO/Biopharma sponsors sourcing from this supplier, i.e. Inotiv (NOTV), or companies that use such products in drug studies, e.g. Laboratory Corporation (lh) and biopharmaceuticals, added Daley.
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