MDS Announces New Focus on High-Growth Life Sciences Markets
01 Settembre 2005 - 2:00PM
PR Newswire (US)
Plan to reduce core businesses from 6 to 3, reposition MDS Pharma
Services and restructure costs TORONTO, Sept. 1
/PRNewswire-FirstCall/ -- MDS Inc. (TSX: MDS, NYSE: MDZ) today
announced a strategic plan to focus resources and management on
opportunities within the fast-growing, global life sciences
markets, which includes its market-leading franchises in
pharmaceutical contract research (served by MDS Pharma Services),
molecular imaging and radio-therapeutics (served by MDS Nordion),
and analytical instruments (served by MDS Sciex). The blended
organic growth rate of the end markets served by MDS will increase
from 3-5% to 7-10% annually. Assets that do not contribute to the
Company's areas of focus are being evaluated with a view towards
maximizing shareholder value. In addition, through a realignment of
its operations and cost structures, the Company is focused on
near-term improvement in financial performance. "The fast growing
life sciences markets hold tremendous potential for MDS - an area
where we already hold strong customer franchises." said Stephen P.
DeFalco, President and CEO, MDS Inc. "MDS will drive down its cost
structure and improve execution to serve these markets effectively
and drive shareholder value. A review of alternatives for Company
assets which are not part of MDS's core focus is underway and
focused on maximization of shareholder value." Details of the new
strategy include: 1) MDS Diagnostics With MDS's new focus on its
core, life sciences businesses, the Company believes that its
Canadian diagnostics business will perform better and provide
shareholders with greater value under an alternative ownership
structure. MDS is evaluating all options for this business unit
that maximize value to shareholders, including a tax efficient sale
or distribution to shareholders. MDS expects that it will be able
to discuss specific plans for its diagnostics unit within the next
few months. MDS Diagnostics is the largest laboratory services
company in Canada delivering services to over 10 million patients
per year. With annual revenues of approximately $400 million
dollars it provides services to physicians and patients through its
extensive network of laboratories and patient service centres. 2)
Other Non-Core Assets MDS is evaluating transactional alternatives
for its interests in Source Medical and MDS Capital. The Company is
actively engaged in discussions with its partners in these
businesses. Source Medical, with annual revenues in excess of $400
million, is Canada's largest distributor of medical, surgical and
laboratory supplies. MDS Capital, with approximately $1 billion in
assets under management, is a leading provider of venture capital
to emerging life sciences companies. 3) Repositioned MDS Pharma
Services MDS has begun the implementation of a comprehensive
repositioning of its pharma services business designed to sharpen
the strategic focus of this business and improve near-term
financial performance. Components of this plan include the closure
of sites in Geneva, Munich and Taiwan, the planned divestiture of
its bio-safety and pharmaceutics businesses, and selected
acquisitions including the recently completed purchase of
Washington-state based SkeleTech Inc., which will strengthen the
Company's market leading pharmacology franchise. With revenues of
approximately $10 million, SkeleTech will be mildly accretive to
earnings in 2006. Planned site closures and divestitures will
reduce revenues by approximately $25 million but will be positive
to earnings in 2006. As previously announced, the Company is adding
capacity to its drug safety assessment facility and its phase I
clinics as well as realigning its Canadian bio-analytical
operations. 4) Corporate In line with its new strategy, MDS has
redefined the role of its corporate centre. The new smaller
corporate function will focus exclusively on strategy, capital
allocation, operating performance improvements, talent management,
and compliance. MDS will eliminate its Enterprise Services unit,
rescale its Information Technology group and review its information
technology outsourcing agreements with the objective of reducing
the overall cost and scope of these agreements. Tom Gernon will
join the Company as Chief Information Officer on September 12, 2005
to lead these efforts. 5) Restructuring The Company is also
implementing a plan to reduce overhead and better align resources
and infrastructure costs thereby realizing significant cost savings
and gaining the agility needed to successfully compete in today's
global life sciences market. As part of this realignment, MDS will
reduce its global workforce by approximately 500 employees,
resulting in annualized savings of approximately $40-45 million in
2006. Significant reductions will occur in Corporate and Enterprise
Services where the workforce will be reduced by approximately a
third. MDS will maintain its focus in the key areas of research and
development and customer-facing activities with minimal disruption.
Front line employees will also become more empowered - enabling MDS
to better respond to the needs of its customers. MDS will report
restructuring charges in both the third and fourth quarter of 2005.
6) Financial Reporting Going forward, approximately 95% of MDS's
revenues will come from international markets, up from 65% today.
In this context, MDS will be reviewing its financial disclosure to
reflect the increased international nature of its operations, align
with its global life sciences peers, and improve shareholder
transparency. MDS Inc.'s Core Life Sciences Units Each of MDS' core
businesses is well positioned within growing markets, with
excellent products and services, and leading market shares. MDS
Pharma Services MDS Pharma Services is the sixth largest contract
research organization in the world providing innovative drug
discovery and development services to the world's leading
pharmaceutical and biotech companies. The contract research market
is a $US 9.2B market (LEK 2003) growing at rates of 10-15 %
annually. MDS Pharma Services offers a full spectrum of services
from early-stage target discovery and validation to late-stage
phase IV studies. MDS is well equipped to meet the needs of the
global pharmaceutical and biotechnology industries, with more than
40 state-of-the-art facilities strategically located around the
world, and the world's largest capacity in early-stage clinical
research, with more than 1,000 beds worldwide. MDS Pharma Services'
clients include most major global pharmaceutical, generic and
biotech companies to enhance the speed, precision and productivity
of drug development programs. Annually, MDS conducts more than
3,000 client studies. MDS Nordion MDS Nordion is an integral part
of the healthcare system and its medical imaging isotopes provide
benefit to over 50,000 patients each day. Cancer patients benefit
from some 15 million cancer treatments each year delivered by MDS
cancer therapy systems in hospitals and clinics in over 80
countries. MDS Nordion is the world leader in the production and
development of innovative medical isotopes, as well as related
technologies and services that are used in the diagnosis,
prevention and treatment of disease. MDS Nordion's expertise and
well-recognized market position translates into significant growth
potential; not only in the worldwide isotopes market, which is
estimated to be a $US 2.8 Billion (LEK 2003) market growing at 5-7
% annually, but also in the fast-growing market of
radiopharmaceuticals. MDS Nordion supplies over half of the world's
reactor-produced isotopes used in nuclear medicine, blood
irradiators and cancer therapy systems. MDS Nordion is also a
recognized leader in the development of novel radiopharmaceuticals,
with a diverse range of superior products and services designed to
increase speed, precision and productivity in the drug development
and disease diagnosis processes. MDS Sciex MDS Sciex is the world's
leading developer and manufacturer of mass spectrometers. These
instruments are used primarily to assist drug discovery and life
sciences research within the global pharmaceutical, biotech and
life sciences research fields. The $US 1.9B (LEK 2003) market for
mass spectrometers is growing at 8-10 % a year, providing the
Company with a high potential for profitable growth. MDS' customers
include leading pharmaceutical and biotech companies as well as
contract research organizations and universities - organizations
working to better understand drug targets and their suitability
long before they are prescribed to patients. MDS Sciex exports
products to more than 60 countries through global joint ventures
with two of the world's leading analytical instrumentation and life
sciences companies. - Applied Biosystems/MDS SCIEX: a 50/50 joint
venture with Applied Biosystems - PerkinElmer SCIEX: a 50/50 joint
venture with PerkinElmer In each of these partnerships, MDS Sciex
is responsible for the research, development and manufacture of
instrumentation, while its joint venture partners manage worldwide
sales, marketing and customer service. About MDS Inc. MDS Inc. has
more than 9,000 highly skilled people in 27 countries. We provide a
diverse range of superior products and services to increase our
customers' speed, precision and productivity in the drug
development and disease diagnosis processes. We are a global,
values-driven life sciences company, recognized for our reliability
and collaborative relationships as we help create better outcomes
in the treatment of disease. Find out more at
http://www.mdsintl.com/ or by calling 1-800-MDS-7222, 24 hours a
day. MDS will be issuing its third quarter financial results on
Thursday, September 8th, 2005. MDS will be holding a conference
call today at 11:00 am EST. This call will be webcast live at
http://www.mdsintl.com/ and will also be available in archived
format after the call. DATASOURCE: MDS Inc. CONTACT: Investor and
Media Relations: Sharon Mathers, Vice-President, Investor
Relations, (416) 675-6777 x 2695,
Copyright