Charles River Laboratories has raised its 2026 profit forecast following a strategic divestiture of non-core and underperforming assets, marking a significant portfolio reshaping effort as the contract research and drug development sector shows early signs of recovery.

The company announced agreements to sell selected European drug discovery assets to IQVIA for approximately $145 million, with the potential for up to $10 million in additional milestone-based payments. The transaction includes five European sites and assets that generated $144 million in revenue in 2025. The deal is expected to close in the second quarter.

In a separate transaction, Charles River will divest its contract development and manufacturing organization (CDMO) and cell solutions businesses to GI Partners. The consideration for this deal is primarily performance-based. Together, the CDMO and cell solutions units generated $143 million in revenue in 2025.

The divestitures follow plans unveiled in November to streamline operations and focus on higher-synergy segments, though buyers were not disclosed at that time.

Strategic Refocus Amid Market Rebound

The moves come as Charles River signals improving demand trends across the biopharma landscape. After a period of reduced activity driven in part by U.S. government drug price negotiations and post-pandemic funding constraints, the company reports increased proposal activity and fewer project cancellations from pharmaceutical clients. Biotech funding has also shown renewed momentum since 2025, easing pressures that had dampened early-stage research outsourcing.

By shedding lower-margin or less strategically aligned businesses, Charles River aims to sharpen its focus on core discovery and preclinical services where it maintains stronger competitive positioning.

The company stated that while the divestitures will reduce reported 2026 revenue by slightly more than $200 million, they are expected to improve adjusted operating margins by at least 100 basis points, reflecting a leaner and more profitable operating structure.

Impact on Buyers

For IQVIA, the acquisition enhances its end-to-end drug discovery platform. The addition of the European assets expands its laboratory footprint and introduces new approach methodologies, including a small-molecule AI-enabled discovery platform. The deal also strengthens IQVIA’s capabilities in non-animal research methods, an area of growing regulatory and industry focus globally.

The divested CDMO business provides production services for gene-modified cell therapies and certain gene therapies, while the cell solutions unit supplies human-derived cellular materials used in the development and manufacturing of advanced therapies. Under GI Partners’ ownership, these assets may receive more targeted investment and operational focus outside Charles River’s broader research infrastructure.

Upgraded 2026 Outlook

Reflecting the anticipated margin expansion and improved operating environment, Charles River raised its 2026 adjusted earnings per share forecast to a range of $10.80 to $11.30—an increase of $0.10 at both the low and high ends compared to its previous guidance.

The revised outlook signals management’s confidence that portfolio optimization, combined with stabilizing industry dynamics, will position the company for more durable growth and profitability. As biopharma pipelines reaccelerate and funding conditions normalize, Charles River appears to be betting that a more focused, higher-margin business model will deliver stronger long-term shareholder value.