MDS Announces Strategy to Focus MDS Pharma Services on Early Stage Operations - Discovery Through Phase IIa



    
    Company to Divest Late Stage Operations, Signs Agreement to Sell
    Phase II-IV Operations to INC Research
    

    TORONTO, June 1 /CNW/ - MDS Inc. (TSX: MDS; NYSE:   MDZ), a leading
provider of products and services to the global life sciences markets, today
announced that it will strategically focus its MDS Pharma Services business on
the delivery of Early Stage (Discovery through Phase IIa) contract research
organization (CRO) services.
    The Company intends to sell its MDS Pharma Services Late Stage
operations, which are comprised of Phase II-IV operations and Central Labs.
MDS has signed an agreement to sell its Phase II-IV operations to INC
Research, Inc., a leading global provider of CRO services, for $50 million,
including certain transition services, and subject to customary post closing
contingencies and adjustments. A suitable buyer is being sought for Central
Labs.
    These decisions are a result of MDS's ongoing strategic review process.
They will support the Company's efforts to advance its leadership position in
the delivery of Early Stage CRO services, where it has a top-three market
position.
    "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."

    Phase II-IV

    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.
    "We extend a warm welcome to the clients and employees of MDS Pharma
Services Phase II-IV business," said Jim Ogle, Chief Executive Officer, INC
Research. "This acquisition reinforces our long-standing commitment at INC
Research to continuously improve service in areas most important to our
customers - therapeutic expertise, talent and experience, and a broader
geographic footprint."
    The transaction is expected to close in the third quarter of the MDS 2009
fiscal year, and is subject to customary approvals and closing conditions. In
addition, the sale of the Company's Phase II to IV operations in France, are
subject to review and consultation with the applicable Works Council in
accordance with French labor laws.

    Central Labs

    As a result of its strategic focus on Early Stage CRO services, the
Company intends to sell MDS Pharma Services' Central Labs. Central Labs
conduct analysis of samples from clinical trials to monitor safety and to test
for physiological impact. This operation has more than 600 employees at six
sites in Europe, North America and Asia. Its proprietary, industry-leading
Apollo study-management system offers clients real-time access to study data
from around the world.
    As MDS exits Late Stage operations, the Company anticipates a smooth
transition for clients and remains focused on meeting client needs.

    More Information about Today's Announcement

    Additional background materials pertaining to today's announcement can be
found on MDS Inc.'s Website at
www.mdsinc.com/for_media/electronic_media_kit.asp

    Caution Concerning Forward-Looking Statements

    This document contains forward-looking statements. Some forward-looking
statements may be identified by words like "believes", "expects",
"anticipates", "plans", "intends", "indicates" or similar expressions. The
statements are not a guarantee of future performance and are inherently
subject to risks and uncertainties. MDS's actual results could differ
materially from those expressed in the forward-looking statements due to these
risks and a number of other factors, including, but not limited to, successful
completion of the aforementioned divestitures, successful implementation of
structural changes, including restructuring plans and acquisitions, technical
or manufacturing or distribution issues, the competitive environment for MDS's
products and services, the degree of market penetration of its products and
services, the ability to secure a reliable supply of raw materials, the impact
of our clients' exercising rights to delay or cancel certain contracts, the
strength of the global economy, the stability of global equity markets, the
availability and cost of financing, the impact of the movement of the U.S.
dollar relative to other currencies, particularly the Canadian dollar and the
euro, uncertainties associated with critical accounting assumptions and
estimates, and other factors set forth in reports and other documents filed by
MDS with Canadian and U.S. securities regulatory authorities from time to
time, including MDS's quarterly and annual MD&A, Annual Information Form, and
Annual Report on Form 40-F for the fiscal year ended October 31, 2008 filed
with the U.S. Securities & Exchange Commission.

    About MDS

    MDS Inc. (TSX: MDS; NYSE:   MDZ) is a global life sciences company that
provides market-leading products and services that our customers need for the
development of drugs and diagnosis and treatment of disease. We are a leading
global provider of pharmaceutical contract research, medical isotopes for
molecular imaging, radiotherapeutics, and analytical instruments. MDS has more
than 5,000 highly skilled people in 29 countries. Find out more at
www.mdsinc.com or by calling 1-888-MDS-7222, 24 hours a day.





For further information:

For further information: MEDIA: Janet Ko, (905) 267-4226,
janet.ko@mdsinc.com; INVESTORS: Kim Lee, (905) 267-4230, kim.lee@mdsinc.com

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