MDS sells late stage trial unit to INC Research
Pharma services president David Spaight told Outsourcing-pharma.com that the divestiture “was driven by the company’s desire to focus its business portfolio on areas where it believes it can expand market leadership.
“The current economy continues to impact the life sciences sector including the market for contract research organization (CRO) services. MDS continues to take a cautious outlook for 2009, given the still challenging and uncertain economic conditions.”
In common with many CROs, MDS’ pharma services unit has had a difficult 12 months as the pharmaceutical industry has trimmed trial and development spending to weather the global economic downturn.
Revenue from this part of MDS' business has fallen for the last two quarters with income generated by late-stage clinical research dropping 18 and 16 per cent respectively as a result of project cancellations.
While income from discovery and early stage development services has also fallen over the last six months, demand for this type of research has remained more stable. This stability was almost certainly a key factor in MDS' move to restructure around this part of its business.
The focus on early-stage research may also prove to be timely if, as has recently been suggested by US rivals Charles River Laboratories (CRL) and Covance, this segemnt of the contract research market is started to recover.
The Phase II-IV unit that INC Research is buying employs more than 800 research staff and, according to the company, has conducted more that 700 trials at 42,000 sites in 25 countries over the last nine years.
In a press statement, INC CEO James Ogle said that: “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
“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.”
These thoughts were echoed COO John Potthoff who said that: “The talented people of MDS Pharma Services Phase II-IV operations will enhance the range and depth of existing INC Research experience and capability, greatly benefiting our customers.”
Whether INC can make the late stage trial business work in the current economic climate remains to be seen.
MDS’ New Jersey headquartered central laboratory business, which processes samples from in-progress trials is also up for sale although, at this stage, no potential buyers have been named.