MDS trying to sell Pharma Services business

By Nick Taylor

- Last updated on GMT

Related tags: Economics, Mds

Facing “unparalleled” challenges MDS is seeking a buyer for its Pharma Services division, and claims to have begun discussions with two interested parties, to allow it to focus on its Nordion business.

Stephen DeFalco, CEO of MDS, explained in a conference call with investors that the combination of the economy and the shutdown of a reactor have created “unparalleled​” challenges for the business.

Part of the company’s response was seen in June when it agreed to sell the late-stage part of its Pharma Services business to INC Research for $50m (€35m).

MDS said this would allow it to focus on “areas where it believes it can expand market leadership​” but it has now emerged that the preclinical and Phase I divisions will also be divested if an appropriate buyer can be found.

DeFalco added that there are two companies interested in acquiring the Pharma Services division. Although the market is turbulent he believes that MDS’ strength in screening and Phase I makes it an attractive target.

The Pharma Services business, along with many of its peers, has faced a challenging period but MDS believes that the buyer will be able to “build market leadership and to position the business to better serve global customers in an increasingly competitive contract research market​”.

In a letter posted on the company’s website David Spaight, president of MDS Pharma Services, sought to reassure clients that the sale and transition period will not impact on the quality of services provided.

MDS also published a preview of its third quarter financial results. The quarter is the first that MDS has counted the Pharma Services late-stage business as discontinued operations.

Net revenues of $190-195m are anticipated, compared to $208m for the early-stage business in the second quarter.

Shedding layers

MDS has sold its Analytical Technologies business to Danaher for $650m. The company is also still seeking a buyer for its Central Labs business.

After divesting these divisions the company will be focused on its Nordion business, which provides medical isotopes for molecular and diagnostic imaging, radiotherapeutics and sterilization technologies.

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