Ricerca Biosciences completes $35M purchase of MDS Pharma units

Contract drug development organization Ricerca Biosciences LLC has completed its acquisition of the discovery and […]

Contract drug development organization Ricerca Biosciences LLC has completed its acquisition of the discovery and preclinical business of MDS Pharma Services, more than doubling its workforce and multiplying its global capabilities.

Ricerca in Concord Township, Ohio, paid $35 million, less normal working capital and a two-year capital expenditure reserve, according to Ian Lennox, Ricerca’s chairman and chief executive.

The MDS business has almost 600 associates in Bothell, Wash.; Lyon, France; and Taipei, Taiwan, according to a Ricerca release. The acquisition more than doubles Ricerca’s workforce of 265 in Ohio, adding 585 employees in the United States, France and Taiwan.

That’s 850 employees. “We intend to keep everyone,” Lennox said at the time the deal was announced. Ricerca now owns the Lyon and Taipei facilities and leases those in Bothell.

The acquisition multiplies Ricerca’s  biopharmaceutical research and development capabilities, which are focused on the developmental phase between intellectual property and submission of the investigational new drug application. “My strategy, supported by investors, has been ‘one-stop shopping’ for clients in chemistry, as well as biology,” Lennox said, pointing to his company’s tagline: “Taking you from IP to IND.”

Perhaps more importantly, it gives Ricerca greater global reach at a time when non-U.S. pharmaceutical companies are growing and some more traditional companies are cutting back. For instance, Ricerca now can offer more global toxicology services by coordinating projects between North America, Europe and Asia, as well as streamlined lead optimization services that combine efficacy and biomarker assays with medicinal chemistry.

MDS in King of Prussia, Pa., a publicly traded company, also is selling its early stage business, which provides discovery-through-Phase 2a clinical trial services to biotechnology and pharmaceutical companies for $45 million and “certain minority equity interests” to a new corporation largely owned by private equity firms Bain Capital Ventures and SV Life Science.

Bain Capital and SV Life Sciences also are Ricerca investors. In mid-February, Bain Capital, which has invested in Midwestern health care start-ups, raised a $525 million fund, its first since 2007.

After a $50 million financial restructuring in early 2007, compliments of Bain and other investors, Ricerca set its sights on a growth strategy. “In early 2008, we felt Ricerca could continue to grow organically. The cost of acquisitions was too high,” Lennox said. “In mid-2009, our board supported my initiative to seek acquisitions that ‘fit’ our strategy, but also diversified both our mix of clients as well as our geographic reach of clients.”

The acquisition of the MDS units diversifies Ricerca’s client mix, moving it from 85 percent biotech clients to 50 percent; 10 percent global pharmaceutical clients to 35 percent, he said. It also moves the company from having 90 percent of its clients in North America, to having 45 percent in North America, 45 percent in Europe and 10 percent in Asia.

“The acquisition is strategically brilliant and at a reasonable cost,” Lennox said. “With facilities worldwide combining local experience, immense scientific expertise and a strong commitment to excellent client service, we provide unique discovery and development services.”

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