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MPI Research signed a definitive agreement with Charles River Laboratories to be acquired in an $800 million cash transaction. The deal is expected to close in second quarter. MPI’s headquarters, shown here, is in Mattawan, west of Kalamazoo. MPI Research signed a definitive agreement with Charles River Laboratories to be acquired in an $800 million cash transaction. The deal is expected to close in second quarter. MPI’s headquarters, shown here, is in Mattawan, west of Kalamazoo. Courtesy Photo

DÉJÀ VU? MPI Research sale expected to benefit SW Michigan, despite loss of HQ

BY Sunday, February 18, 2018 07:01pm

MATTAWAN — The proposed sale of MPI Research Inc. to Charles River Laboratories International Inc. for $800 million would end local ownership for a company that’s one of the largest employers in the greater Kalamazoo area. 

It’s a situation that on its surface draws many similarities to previous deals involving the Kalamazoo area’s legacy companies in the pharmaceutical industry, namely the former Upjohn Co. that sold to Pharmacia and later to Pfizer Inc. 

With the fallout from the Upjohn acquisition still fresh in many people’s minds some 15 years later, the loss of local ownership at MPI Research could cause concern not just for the firm’s estimated 1,300 jobs but also for the company’s role in the community.

Despite the potential for a lesser investment in the “cultural piece” that could come from no longer having the company’s headquarters locally, Southwest Michigan First CEO Ron Kitchens remains confident the MPI Research sale will work out well for the region.

“MPI is a great company that’s built a great global footprint, so I don’t expect anything but good things,” Kitchens told MiBiz. “In a time where that’s an industry that’s so under pressure, it takes big players with deep access to capital to grow and a strong sales network, and Charles River brings all those things.” 

The sale of a homegrown company that expanded into a global corporation is “the natural course of business these days,” Kitchens said.

The Wilmington, Mass.-based Charles River Laboratories (NYSE: CRL) signed a definitive agreement on Feb. 12 to buy MPI Research, which is headquartered in Mattawan in Van Buren County, just west of the Kalamazoo and Portage area. The deal for MPI Research, one of the largest life sciences companies in Michigan, should close in the second quarter pending regulatory and other approvals.

As corporations outsource more of their R&D, contract research organizations (CROs) like MPI Research and Charles River Laboratories need to expand to keep up, which is driving the industry to consolidate. Acquisitions enable larger, growing CROs to achieve greater scale, add capabilities and expand their global geographic reach that clients increasingly want.

“There’s a lot of activity happening in the market. As they’re consolidating and the market is growing, it’s continuing to be a pretty active market,” said Rajesh Kothari, managing director of Cascade Partners LLC, a Southfield-based investment banking firm that’s active in the health care sector.

“People are looking for how can I be the one-stop solution to pharma and med device companies by having sufficient capacity, as the case is with MPI, or expanding technical capabilities or experience in specific therapeutic areas — (those) are all the reasons these transactions are happening,” said Kothari, who calls the CRO industry a “relatively fragmented” market.

Kothari also views the deal as potentially good for Kalamazoo, given the region’s history and expertise in pharmaceuticals.

“There’s so much talent there,” he said. “As a result, they (Charles River) are going to benefit from that clinical expertise that exists in and around Kalamazoo to support their growth because they are able to hire that talent.”


MPI Research, a pre-clinical CRO serving pharmaceutical clients, generated about $240 million in revenue for 2017. The proposed acquisition comes about two years after the retirement of MPI founder and CEO Bill Parfet, an heir of the Upjohn family. 

The company referred a request for comment to Charles River, which did not respond prior to the publication deadline for this report. 

In a conference call to discuss Charles River Laboratories’ 2017 results, Chairman and CEO James Foster told investors that MPI’s 1 million-square-foot facility in Michigan will provide the company with needed capacity. 

“It will allow us to expand smoothly into new space as we need it, probably in lieu of building it out somewhere else,” Foster said. “So we think this will be a highly strategic facility addition to our portfolio and one that expands our capabilities in a few new areas, but also expands some of the areas that we are currently participating in a more robust way.”

The acquisition is expected to add $170 million to $190 million in revenue to Charles River in 2018, depending on the timing of the close, and $260 million to $280 million in 2019.

MPI would become a part of Charles River’s Discovery and Safety Assessment division, the company’s largest business unit that grew sales by more than 17 percent to $980 million last year. In an annual financial report to securities regulators filed Feb. 13, Charles River attributed growth of the division “to increased demand from mid-tier biotechnology clients and global biopharmaceuticals clients.”

Overall, Charles River generated $1.87 billion in total revenue last year, up from $1.68 billion in 2016.


The MPI Research deal comes about as life sciences industry associations in Michigan and other states wonder how the ongoing consolidation of CROs could affect the sector as a whole, said Stephen Rapundalo, CEO of MichBio

The unknowns surrounding how an acquisition will play out locally cause some anxiety, he said.

“One hopes that in the long run it ends up being done for the right reasons and the right outcomes,” Rapundalo told MiBiz. “My hope is that this will be a net positive (and) that this will only strengthen what’s at MPI and in Mattawan and there will be growth.”

Kitchens at Southwest Michigan First notes that even though Pfizer pulled human research and development out of Kalamazoo years ago, the company’s drug production operations remain, and are even growing. 

The company last week officially opened a 98,000-square-foot addition to its main manufacturing plant in Portage, a part of a planned investment of $147 million.

Kitchens also cites Zoetis Inc., the animal health company Pfizer spun out in 2013 that now employs more than 1,000 people at a local research center that a few years ago employed about 50.

“Constant, continuous change is the business model, particularly in life sciences,” Kitchens said. “This is a natural transition of what may be the most complicated business in the world, and that’s pharmaceuticals and health care. I’d be more worried if we weren’t seeing changes because that would mean we’re not relevant.” 

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