Canadian life sciences company MDS Inc is not out the woods yet with MDS Pharma Services, the contract research organisation (CRO) still feeling the reverberations from US concerns over bioequivalence studies conducted at two of its facilities in Quebec.

MDS has announced a restructuring plan involving total charges of around US$28 million to “drive improved profitability” at MDS Pharma Services and at MDS Analytical Technologies, the unit that supplies life sciences tools such as mass spectrometry. A net of some 210 staff will go as part of the restructuring, which is expected to yield pre-tax savings of about US$20 million.

The associated cumulative restructuring charges before tax should be roughly US$18 million, with the majority of these falling in the third quarter of fiscal 2008. MDS also expects to take a pre-tax asset impairment charge of around US$10 million related to the bioanalytical operations in Montreal, Canada that were the subject of audits requested by the US Food and Drug Administration in January 2007.

MDS Pharma Services already took a restructuring charge of US$26 million in the second quarter of 2007, for a programme that included substantial redundancies in Montreal and at other sites. The latest measures are likely to cut net income and basic earnings per share for fiscal 2008 by approximately US$20 million and US$0.16 respectively, the company says.

Announcing its second-quarter results in June, MDS Inc lowered its financial guidance for 2008, citing mainly “softening demand for high-end instruments in the pharmaceutical markets and a delay in achieving targeted profitability at MDS Pharma Services”.

Overall revenues were now projected at US$1,350 million-US$1,400 million, compared with US$1,350 million-US$1,410 million as of 21 February 2008, while the forecast for adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped from US$175million-185 million to US$160 million-US$170 million.

MDS Pharma Services reported adjusted EDITDA of US$1 million in the negative for the second quarter, while the CRO’s net revenues rose by 11.3% to US$128 million. Third-quarter results will be issued by MDS Inc on 4 September, when the parent company will address the impact of the new charges on its guidance for fiscal 2008.