MDS finds buyers for Pharma Services; 275 jobs will be lost
The deals to sell the discovery and early stage businesses exclude MDS’ site in Montreal, Canada, which will close down in stages over the next 12 months. Closure of the Montreal site, and redundancies at some other early stage facilities, will result in the loss of approximately 225 jobs.
A further 50 employees, mostly involved in support roles, such as finance, IT and human resources, will also lose their jobs. Some of these redundancies are a consequence of the closure of MDS’ headquarters in King of Prussia, Pennsylvania, US.
MDS’ Montreal site was subject to a review by the US Food and Drug Administration (FDA) but it was excluded from the deal on other grounds, according to Charlene McGrady, senior director, communications and PR at MDS Pharma Services.
McGrady told Outsourcing-Pharma that “the decision was made in reaction to ongoing softness in demand for early stage services and in order to align capacity with client demand”, adding that the buyer supports the closure.
The buyer of the early stage business is a new corporation owned by Bain Capital Ventures and SV Life Sciences. Included in the deal are sites in Belfast, Northern Ireland; Lincoln, Nebraska, US; Neptune, New Jersey, US; Phoenix, Arizona, US; and Zurich, Switzerland.
Both of the corporation’s financial backers have experience in the life sciences sector, investing in a number of companies, including the CRO which has agreed to buy MDS’ discovery and preclinical business, Ricerca Biosciences.
The deal between Ricerca and MDS includes sites in Bothell, Washington, US; Lyon, France; and Taipei, Taiwan. Acquiring the sites puts Ricerca “on the forefront of providing comprehensive discovery and preclinical services”,added Ian Lennox, CEO of Ricerca
Acquiring MDS gives Ricerca molecular profiling, pharmacology / DMPK (drug metabolism and pharmacokinetics) and drug safety assessment services. These complement its existing capacity, allowing the company to support sponsors’ candidates from discovery through to investigational new drug (IND) application.
Closing the deals
MDS will receive a total of $45m (€32.6m) for its preclinical and early stage businesses. This consists of a $20m cash payment, which is estimated to generate net proceeds of approximately $7m, and a five-year, $25m note.
Furthermore, MDS has a 15 per cent equity interest in the corporation buying the early stage business. MDS expects the deals will close within the next two months.
The deals mark the end of MDS’ reorganisation plans. By selling its late stage to INC Research, central laboratories to private investors and now agreeing to divest the remaining discovery to Phase IIa business, MDS has exited the contract research organisation (CRO) sector.