MDS Inc. Tampa Operations acquired by Xcelience, LLC

Thursday May 11

W. CONSHOHOCKEN, Penna. – May 11, 2006 – MDS Inc. (TSX: MDS; NYSE: MDZ) ("MDS"), based in Toronto, Canada, completed the divestiture of their Tampa-based drug development operations. That operation, which provides pre-formulation, formulation, analytical and manufacturing and packaging services, was purchased by Xcelience, LLC in a management buyout led by industry veterans Derek Hennecke and Randall Guthrie. MDS previously announced plans for the divestiture as part of an overall plan to exit certain business areas and "concentrate on MDS's core competencies and focus resources and growth efforts on areas that offer strategic synergies for the Company."

Xcelience will continue to operate as a premier source for reliable drug discovery and innovative development solutions, providing an industry-experienced staff of scientists able to quickly and efficiently move compounds in research and development stages, to market. The company is the only pharmaceutics CRO in Tampa providing valuable drug discovery capabilities to support the local pharma industry, as well as the only CRO in North America that has the capability to dose small volumes of API into capsules automatically at high precision with Capsugel’s Xcelodose™ technology.

The company has provided analytical, preformulation, formulation, manufacturing and stability services since 1997, and its core central researchers, developers and project managers are helping optimize the change to the Xcelience brand. The key personnel are ensuring customers will receive seamless, timely, consistent and superior service throughout the drug development process. (www.xcelience.com)

Explaining the company’s new name, Xcelience President and CEO, Derek Hennecke says, “The laboratory is looking to the future, focused more than ever on excelling the science of formulation development.” Hennecke says that the company’s new independence “will allow us to focus on the area of pharmaceutics and devote all of our attention to our sponsors and give them the best possible service in this field.”

MDS Inc. was represented by Fairmount Partners, a leading investment bank serving life science. Fairmount assisted in arranging and closing the transaction. Neal McCarthy, Managing Director of Fairmount Partners commented “this was a classic win-win deal, providing continuity for the customers and employees of the Tampa operations, offering a great opportunity for the new shareholders of Xcelience, and allowing MDS to focus on its successful core operations. We wish them both parties great success in the future.”

About MDS Pharma Services

MDS Pharma Services offers a full spectrum of resources to meet the drug discovery and development needs of the pharmaceutical and biotechnology industries. With numerous facilities strategically located around the world, the company applies advanced scientific and technological expertise to each stage of the drug discovery and development process - Early Stage: lead optimization, pre-IND research, pharmaceutical and biopharmaceutical development, early clinical research (bioequivalence, phases I-IIa) and bioanalysis; and Late Stage: global clinical development (phases IIb-IV) and central lab. For more information, visit MDS Pharma Services' Web site at www.mdsps.com. 

MDS Pharma Services is an integral part of MDS Inc. (TSX: MDS; NYSE: MDZ). MDS Inc. has more than 8,800 highly skilled people in 28 countries. It provides a diverse range of superior products and services to increase customers' speed, precision and productivity in the drug development and disease diagnosis processes. MDS is a global, values-driven life sciences company, recognized for its reliability and collaborative relationships that help create better outcomes in the treatment of disease.
 

Principals of Fairmount Partners acted as advisors to MDS, Inc. in this transaction.