MENLO PARK, Calif.—In a move that was perhaps equal measure protective and proactive, SRI International announced recently it has acquired all the operations of clinical pathology analysis company Quality Clinical Labs (QCL). Terms of the transaction were not released.
The acquisition by SRI comes as the company was looking to provide QCL with even more preclinical pathology work, says Dr. Jon Mirsalis, managing director of SRI's Biosciences division. "We were sending some samples to another lab that was not GLP-compliant," says Mirsalis. "But because of the needs of our customers we need to do our work under GLP. With QCL being the only GLP-compliant lab in California, we were preparing to give them another couple hundred thousand dollars of work, but at the same time, this left us feeling rather vulnerable."
That vulnerability was borne of the fact that SRI did not have the same clinical testing capacity as QCL, while the clinical hematology and chemistry evaluations done there are necessary components of preclinical studies required by the FDA in the development of new drugs. With QCL's director, Christina Tang, nearing retirement age, if the lab were sold to a competitor, SRI could have been forced to find another lab in another part of the country. And that would mean the added expense and complexity of shipping blood samples.
"I'd say there were three pieces to the deal that were drivers," Mirsalis says. "The one with the most urgency was as a protective move. If they had gone away or a competitor had bought them, we would have been in severe trouble."
Also important for SRI was the fact that it was acquiring a capability that the research organization didn't currently have in-house. SRI had such a lab a number of years ago, but the organization didn't generate enough of that specific work to keep it busy all year-round. Now, it has come full-circle where it was farming out a large quantity of pathology work it needed for clients.
The third driver for SRI was access to QCL's clients. "As the only GLP-compliant lab of its kind in the state of California, they were getting 100 percent of the business from this state. That includes some very big names in industry and now they will need to send their business to us," Mirsalis points out. "This can help us get a foot in the door and to sell our other services, so this is a real growth opportunity."
In the near term, SRI's broader marketing reach should translate to an increase of QCL's business of between 10 percent and 20 percent in the first year, with more significant growth possible down the road.
To help with the transition, Tang will stay on with SRI for the immediate future and continue to run the six-person operation out of its home base in Mountain View, Calif. It will also retain the QCL name.