Huntingdon Life Sciences Group Plc Business Information, Profile, and History

Company Perspectives:

Huntingdon Life Sciences is one of the world's foremost product development companies. We work with a wide variety of products, including Pharmaceuticals, Industrial Chemicals, Veterinary Products, Foods & Flavourings, to help their manufacturers develop safer products for the market.

History of Huntingdon Life Sciences Group Plc

Based in the United Kingdom, Huntingdon Life Sciences Group plc is a contract research organization (CRO) involved in safety evaluation of products for the pharmaceutical and biopharmaceutical, agricultural, and industrial chemical industries. After conducting business for 45 years in relative obscurity, Huntingdon has since become the focus of animal rights activists concerned about the company's treatment of its laboratory animals. While facilities have been picketed in both the United States and Britain, activists in the latter have vowed to drive Huntingdon out of business and have resorted to intimidation tactics and, in some cases, violence. Shareholders, brokers, and banks have all been scared away from Huntingdon, driving down the price of the company's stock so low that it was delisted from the New York Stock Exchange. A backlash against the activists in 2001, however, has led the British government, the pharmaceutical industry, and the banks to rally behind the beleaguered company.

Formation of Huntingdon in 1951

Huntingdon was originally incorporated in the United Kingdom in 1951 as Nutrition Research Co. Ltd., a CRO that initially focused on nutrition, veterinary, and biochemical research. It then became involved with pharmaceuticals, food additives, and industrial and consumer chemicals. In 1959 it changed its name to Nutritional Research Unit Ltd. The company benefited in the early 1960s from increased government testing requirements, especially in the pharmaceutical industry. In 1964 it was acquired by the U.S. medical supply firm of Becton Dickinson.

Becton Dickinson, originally founded in 1897, was one of the first U.S. companies to manufacture hypodermic needles. Over the years, it developed disposable syringes and manufactured other medical products, such as stethoscopes and the Vacutainer used in laboratories to collect blood. In 1963 Becton Dickinson made a public stock offering to raise capital for expansion. In addition to its purchase of Nutritional Research Unit, it bought up dozens of medical supply, testing, and lab companies over the next several years, as well as delving into businesses unrelated to medicine. Nutritional Research Unit would operate as a subsidiary of its American corporate parent for the next 20 years, at which point Becton Dickinson decided to change course. After fending off a takeover bid by Sun Company in 1978, management began to shed non-essential businesses. Because Becton Dickinson was looking to manufacture medical products that would compete with customers of Nutritional Research Unit, it decided to sell off the testing business.

In April 1983 Becton Dickinson created Huntingdon Research Centre PLC. It then offered four million American depositary receipts (ADRs) for sale at $15 each, representing the company's entire interest in Huntingdon. In 1985, as it began to expand its operations, the company changed its name to Huntingdon International Holdings plc. In that year it established Huntingdon Analytical Services Inc. to do business in the United States, gaining a toehold in upstate New York after being courted by the New York Department of Economic Development, which helped Huntingdon comply with U.S. regulations. Even though Huntingdon ADRs were traded on the NASDAQ, securing a U.S. presence helped the company gain the attention of U.S. investors, which in turn was instrumental in the company achieving a U.K. quotation in 1988.

To augment its CRO business, Huntingdon acquired Minnesota's Twin City Testing Laboratory Inc. and affiliated companies in 1985, followed by the acquisition of Nebraska Testing Corporation in 1986; Travis Laboratories and Kansas City Test Laboratory Inc. in 1989; and Southwestern Laboratories, Inc. in 1990. Huntingdon also decided to diversify its operations, primarily in the United States, by becoming involved in engineering and environmental services. In 1987 it purchased Northern Engineering and Testing, Inc., and then in 1988 bought Empire Soils Investigations Inc., Chen Associates Inc., and Asteco Inc. In 1990 Huntingdon acquired the St. Louis branch of Envirodyne Engineers Inc. and Whiteley Holdings Ltd. In 1991 it acquired Austin Research Engineers, Inc., followed by Travers Morgan Ltd., Huntingdon's most expensive deal.

By the early 1990s Huntingdon was organized into three business groups: the Life Sciences Group, the Engineering/Environmental Group, and the Travers Morgan Group, which offered engineering and environmental consulting services outside of the United States. The mix of business, however, did not prove successful, in large part because of a downturn in the U.S. economy and a retreat from strict enforcement of environmental regulations. Only the Life Sciences Group showed long-term promise. Travers Morgan was a drain from the outset. By 1995 it was allowed to lapse into insolvency, control passed into other hands, and Huntingdon wrote off the investment. In 1995 the engineering and environmental businesses, which had lost $3 million in the previous fiscal year, were sold to Maxim Engineers Inc. of Dallas, Texas, for $14 million and the assumption of $6.7 million in debt.

Focus on Life Sciences: Mid-1990s

To bolster its CRO business and reinforce its U.S. presence, Huntingdon in 1995 acquired the toxicology business of Applied Biosciences International for $32.5 million in cash, plus Huntingdon's Leicester Clinical Research Centre. The deal not only included a U.S. laboratory located near Princeton, New Jersey, it brought with it two British facilities as well. In 1997 Huntingdon International Holdings changed its name to Huntingdon Life Sciences Group. The U.K. subsidiary, Huntingdon Research Centre, changed its name to Huntingdon Life Sciences Ltd., while the U.S. business operated as Huntingdon Life Sciences Inc.

After almost 15 years since Becton Dickinson floated the company, Huntingdon appeared to have finally found its feet. It was now committed to the CRO business, in which it had become one of the leading companies in the world, boasting scores of major customers, and benefiting from a presence on both sides of the Atlantic. The company appeared poised for a bright future when it found itself caught up in controversy and the target of animal rights groups in both the United States and Britain.

In the United States, the Huntingdon laboratory in New Jersey was infiltrated by an investigator of the People for the Ethical Treatment of Animals. PETA, formed in 1980, relied on undercover work to produce what they considered evidence of animal abuse, which in turn sparked protests that resulted in government investigations, as well as attracting new recruits to the organization. PETA estimated that its membership exceeded 600,000. One of its undercover agents was Michele Rokke, a former Minnesota hairdresser.

In September 1996 Rokke was hired as a lab technician at Huntingdon's New Jersey lab. Wearing glasses with a pinpoint video camera in the bridge, she taped some 50 hours of laboratory activities during the eight months she was employed. In addition, she made some six hours of audiotapes and photocopied 8,000 pages of documents, including a client list. Huntingdon, at the time, was using dogs to test an antibacterial agent that Colgate-Palmolive wanted to add to toothpaste. Using Rokke's material as support, PETA accused Huntingdon of mistreating the dogs. Moreover, PETA revealed that beagles were to have their legs broken in order to test a new drug, intended to combat osteoporosis, for a Japanese company, Yamanouchi Pharmaceuticals. PETA also accused Huntingdon technicians of not properly anesthetizing monkeys before removing organs in a Procter & Gamble study. PETA urged consumers to boycott Colgate-Palmolive and pressured Procter & Gamble to sever its ties with Huntingdon. The group garnered a great deal of publicity when actress Kim Basinger showed up at the lab in an orchestrated attempt to adopt some 40 beagles. Although she was turned away, Yamanouchi soon canceled its contract and the dogs were eventually put up for adoption.

Huntingdon believed that its laboratory methods complied with the standards laid out in the Animal Welfare Act, and that PETA employed tactics worthy of extortionists. The company filed a civil lawsuit against PETA under the Racketeering Influenced Corrupt Organization Act, better known as RICO, which was generally reserved for criminal organizations. Huntingdon contended that PETA had engaged in a practice of making baseless charges that ruined scientific careers and devastated legitimate businesses. In December 1997 the two parties settled the suit out of court, and both claimed victory. The charges were dropped and PETA did not have to pay damages, but it did agree to return documents, videotapes, and audiotapes, as well as not to further interfere with Huntingdon's customer relationships or investigate the company for five years. Several months later, as a result of the PETA investigation, Huntingdon was fined $50,000 by the Department of Agriculture for violating laws regulating the care and treatment of laboratory animals, although most of the violations related to record keeping and the failure to maintain a proper committee to oversee the laboratory's use of animals.

1997 Documentary a Threat to Huntingdon's Existence

Around the same time that Rokke was working at the New Jersey facility, the U.K. operation also was infiltrated. England had a long history of opposing animal experimentation and championing animal rights in general. It was British activists in 1980 who were instrumental in the movement to oppose the use of animal furs in apparel. Huntingdon also had been the frequent site of protesters since the 1970s and already had been infiltrated in 1989 when an investigator for the British Union for the Abolition of Vivisection (BUAV) documented and photographed laboratory practices. Then, in March 1997, undercover videotape would be broadcast on Britain's Channel 4, in its "Countryside Undercover" series. Scenes of workers mistreating animals caused a public uproar and led to the company firing a worker who had been filmed punching a dog. Huntingdon, contending that the incident was an aberration, did not apologize, a failure that resulted in even more bad publicity. Although the government imposed a number of conditions on Huntingdon, the company was soon permitted to resume its business. Animal rights activists, led by a group called the Coalition to Ruin Huntingdon Life Sciences, regularly picketed the company. Customers abandoned the company, and its finances soured as did the price of its stock. Huntingdon was on the brink of receivership in August 1998 when a major loan was due. The company, however, received an infusion of cash from American investors headed by Andrew Baker, who had experience running Corning's clinical laboratory business. The new group gained a 43.4 percent stake in Huntingdon and installed a fresh management team. The company appeared to have weathered the storm and over the next year began to make strides at resurrecting its business when it was targeted by a new group of animal rights supporters, SHAC (Stop Huntingdon Animal Cruelty), who vowed to drive Huntingdon out of business within three years.

In January 2000 SHAC began its campaign, initially focusing on major Huntingdon shareholders, such as investment firm Phillips & Drew. Demonstrations were conducted outside the homes of the firm's directors, a hoax bomb threat was called into the office, and within a month Phillips & Drew dumped its Huntingdon shares. Huntingdon's bank, Natwest, then experienced a spate of vandalism, as ATM machines were disabled by cards dipped in glue. Following months of staff intimidation, the Royal Bank of Scotland, which acquired NatWest, eventually cut off Huntingdon's overdraft facility, which allowed the company to borrow sufficient operational funds. Directors of Huntingdon's corporate broker, WestLB Panmure, also were targeted. After a number of late-night phone calls, demonstrations, and death threats, WestLB dropped Huntingdon as a client. Individual investors, including a 70-year-old pensioner, also were targeted by demonstrators who picketed random shareholders' homes for 24 straight hours.

Meanwhile, activities directed at Huntingdon facilities were conducted on a daily basis, with protesters reportedly spitting on workers' cars and shouting, "We know where your children go to school." SHAC then published the names and addresses of Huntingdon employees—clerks and secretaries in addition to lab technicians. One night in August 2000 several Huntingdon employees had their cars firebombed. Over the subsequent months, more cars would be torched, a senior manager would have a chemical agent splashed into his eyes as he was about to enter his home, and Huntingdon's chief operating officer was beaten by masked men wielding ax handles. Police also linked a series of mail bombs containing nails to animal activists. SHAC disavowed these acts of violence, attributing them to frustrated fringe elements.

In January 2001 Citibank severed ties with Huntingdon. Under pressure from the Royal Bank of Scotland to repay a $33 million loan, the company was again on the brink of collapse. Only a last-minute deal with a backer, whose name was to remain secret, kept the company in business. Within a week, however, the backer was identified as the Stephens Group of Little Rock, Arkansas, an investment bank headed by Warren Stephens. SHAC then drew on American counterparts to provide pressure on Stephens, which was now Huntingdon's largest shareholder, with a 15 percent stake. In addition to demonstrations outside of Huntingdon's New Jersey lab, protesters picketed the Augusta National Golf Club where Mr. Stephens was a member, as well as disrupted a Las Vegas junket for clients of his firm. In England, Winterflood Securities, one of Huntingdon's marketmakers (or brokers), succumbed to SHAC and dropped Huntingdon after the police denied its request for staff protection. Dresdner Kleinwort Wasserstein also withdrew, citing its policy not to serve as sole broker. Moreover, TD Waterhouse and Charles Schwab Europe ceased trading Huntingdon stock, citing concern for the safety of staff.

The tactics of SHAC and other activists began to produce a backlash. The British government passed legislation to prevent the violent intimidation of staff at research laboratories, as well as providing funds for the local police in dealing with the protests. In May 2001 several leading pharmaceutical companies, no doubt fearing that they might be future targets, threatened to boycott banks and other financial institutions if they failed to stand up to animal activists. After the government and police assured banks of protection, the British Bankers' Association announced "a renewed determination to maintain a service to customers regardless of intimidation." Despite receiving support after months of virtual isolation, Huntingdon continued to face a coalition of groups who were determined to drive the company out of business. Whether it would manage to survive, let alone rebuild its business, remained open to question.

Principal Subsidiaries: Huntingdon Life Sciences Limited; Huntingdon Life Sciences Inc.; HIH Capital Ltd.

Principal Competitors: Covance Inc.; Inveresk Research; Quintiles Transnational Corporation.

Chronology

• Key Dates:
• 1951: Company is established as Nutrition Research Co. Ltd.
• 1959: Company's name is changed to Nutritional Research Unit Ltd.
• 1964: Company is acquired by Becton Dickinson.
• 1983: Company is renamed Huntingdon Research Centre plc and is floated as a separate company.
• 1985: Company's name is changed to Huntingdon International Holdings plc and business is expanded to include engineering and environmental consulting services.
• 1995: Huntingdon sells off engineering and environmental businesses.
• 1997: Company changes its name to Huntingdon Life Sciences Group plc; major protests by animal rights groups begin.