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Medco to buy United BioSource for $730m

Medco Health Solutions has agreed to buy the drug and device information services company United BioSource Corporation for $730m

Medco Health Solutions, the pharmacy services giant, has agreed to buy the drug and device information services company United BioSource Corporation for around $730m in cash as part of a strategy to extend its core capabilities in data analytics and research.

United BioSource performs post-approval drug and device research for life sciences clients around the world, with a focus on the US, Europe and Japan. The company's research addresses safety and risk management, as well as health economics and outcomes. The work includes prospective safety studies, risk evaluation and mitigation (REMS) studies, cost-benefit and cost-effectiveness evaluations, budget-impact modelling, and epidemiologic studies. The company was founded in 2003 and is headquartered in Bethesda, Maryland, with offices in North and South America, Europe and Asia.

The information services company expects to bring in around $280m in revenues this year and has an annual growth rate of around 20 per cent. Medco will pay for the acquisition with free cash and existing debt facilities and expects the deal to close in the quarter three. The new business is likely to be slightly accretive next year, excluding one-time items and amortization, according to the company.

United BioSource will become a wholly-owned subsidiary of Medco but will be run independently from Medco's core business "to ensure compliance with contractual requirements and client expectations," the company said.

Earlier this year, United BioSource made an acquisition of its own, buying up Abt Bio-Pharma Solutions, a Boston, Massachusetts-based provider of health economics and outcomes research, registries and observational studies, and market access solutions to the biopharmaceutical, medical device, and diagnostics industries.

Demand for the kinds of services United BioSource provides is likely to grow in the coming years, given the FDA's stated intentions to strengthen its post-market oversight of pharmaceuticals and the cost-effectiveness components of the recently enacted healthcare reform legislation.

16th August 2010

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