MDS Sells Late-Stage Operations

MDS, Inc. is divesting its Phase II-IV operations to INC Research for $50 million. MDS plans to focus on early stage discovery through Phase IIa CRO services.

“We are taking action to enhance shareholder value by focusing our business portfolio on areas where we believe we can expand market leadership,” said Stephen P. DeFalco, president and chief executive officer, MDS Inc. “While our investments in MDS Pharma Services’ Late Stage have significantly strengthened the business, further success requires greater scale. By divesting our Phase II-IV operations, we will be better able to take advantage of our core competencies in Early Stage. We believe this will prove beneficial to the success of the business, to customers and to shareholders.”

Under the terms of the agreement, INC Research will acquire MDS Pharma Services’ Phase II-IV operations, which includes approximately 800 employees who conduct large, multi-site clinical trials in more than 25 countries. The acquisition of MDS Pharma Services Phase II-IV operation is expected to enhance INC Research’s therapeutic expertise in vaccine, respiratory, cardiovascular and endocrinology clinical research, and extend its global presence in emerging markets including South America, Asia Pacific and Africa.

“We see the MDS Pharma Services Phase II-IV operations as an exceptional fit with our services and culture at INC Research. With this acquisition we will unite two respected players with specialized international capability to form a new global leader with a full range of CRO services,” said James Ogle, chief executive officer of INC Research. “Furthermore, these synergies will provide customers with a more robust service offering and enhance an unyielding commitment to execute on projects with the highest standard of quality in the industry.”

As a result of its strategic focus on early-stage CRO services, the company intends to sell its Central Labs. This operation has more than 600 employees at six sites in Europe, North America and Asia. The transaction is expected to close in the third quarter of the MDS 2009 fiscal year.