UPDATE 2-MDS takes charges to bolster competitive edge

(Adds analyst comments. In U.S. dollars unless noted)

By Scott Anderson

TORONTO, July 18 (Reuters) - MDS Inc (MDS.TO: Quote, Profile, Research, Stock Buzz) said on Friday it expects to record charges totaling $28 million, mostly in the third quarter, as it cuts 210 jobs and records an asset impairment charge related to its MDS Pharma Services laboratory in Montreal.

The Canadian medical-services company said the charges would reduce its net income for fiscal 2008 by about $20 million, or 16 cents a basic share, after tax.

MDS, which specializes in analytical instruments, molecular imaging and contract research and has about 5,500 employees, said $18 million of the charges in its restructuring plan would be taken at its MDS Pharma Services and MDS Analytical Technologies divisions.

The remaining $10 million in charges relate to its Pharma Services laboratory in Montreal, which has been the focus of a U.S. Food and Drug Administration investigation dating back to 2004 concerning generic drug studies.

MDS bolstered its analytical division in 2007 with the $615 million purchase of Molecular Devices Corp, a U.S-based maker of high-performance measurement tools for the biotech industry.

Since then it has struggled with falling demand for some of its products.

In early June, MDS cut its 2008 financial forecast amid softening demand for high-end medical instruments.  Continued...