This week's announcement that some of Charles River Laboratories’ (NYSE: CRL) investors blocked the deal to acquire WuXi AppTec (NYSE: WX) is remarkable in several aspects. Most importantly, Charles River is passing up a one-time opportunity to establish near-complete global dominance in its industry. The deal significantly undervalued WuXi because it ignored the strategic value of WuXi itself, which is the dominant player in the world's most important emerging market.

This strategic value is not factored into WuXi's market price. Charles River was getting a bargain. Charles River’s management understood this, but its shareholders obviously didn't. The dissenters, who characterize themselves as "activist" shareholders, have taken a profoundly anti-shareholder action. Charles Rivers is an admirable company, but one that is saddled with deeply challenging market forces working against it.

WuXi is the leader of a new generation of companies: fast-growing, capital-efficient, and based in the markets that represent the future. In three years, it is WuXi that will be able to buy Charles River Labs, and at a price that will make Charles River's shareholders wish they could reverse today’s decision.

Their rejection of the deal can be explained only by a focus on very short-term considerations at the expense of true strategic considerations (which strikes this writer as deeply irresponsible) or by simple, but inexcusable, misunderstanding of this industry. It is clear that the dissenters have not visited China, or they would know they are on the wrong side of history.

Dr. Charles Hsu is a veteran entrepreneur and venture capitalist who has been involved with over 30 life sciences and healthcare companies as a founder, investor, board director and/or advisor. He is an advisor to ChinaBio®.

See our other articles on WuXi AppTec and Charles River Labs.

Disclosure: none.