As part of transforming from a maker of primarily generic drugs to a maker of innovator products, and also as part of its impending merger with Aliso Viejo, Calif.-based Valeant, Toronto-based Biovail has sold its 194-bed, phase I/bioanalystics lab to Indian CRO Lambda Therapeutic Research for $6 million.

The purchase gives 11-year-old Lambda, headquartered in Ahmedabad, more than 600 beds, placing the company among the five largest phase I groups in the world, according to Neal McCarthy, managing director of the CRO-focused investment banking firm Fairmount Partners, which worked on the deal.

The sale makes sense for Biovail. “Bovail intended to change their focus and this is a logical next step for them,” said McCarthy.

Christopher Ore, formerly general manager of Biovail’s contract research division and now Lambda’s chief operating officer, said Lambda was already a dominant independent phase I player in India and the acquisition is part of its recent strategy to offer phase I in other parts of the world. In 2007, the company acquired the Polish phase I company CBK-MPR Pharma. The following year, it picked up another European holding: Pharm V Solutions in London.

“This acquisition gives us the opportunity to mirror the direction our clients have been going in over the last two or three years,” said Ore. “I have seen lots of outsourcing to India and Europe.”

He added that Canada has recently become an important part of that mix as phase I units can get studies up and running in about 10 days, due to changes in regulatory requirements. Previously, it took about 60 days. “The regulatory filing period for an early phase trial is the most advantageous in the world,” Ore said.

Biovail Contract Research is comprised of two Toronto locations totaling about 46,000 square feet housing six study clinics, almost 200 beds, as well as a bioanalytical laboratory and clinical data management department.

The units, located about a mile apart, have done approximately 3,500 phase I, bioavailability/bioequivalence and/or drug-interaction studies on 400 different chemical entities. Combined, they have 100 employees and a database with more than 100,000 potential volunteers.

On June 21, Biovail announced in June that it would buy Valeant for $3.3 billion. As part of the merger, Biovail will become Valeant Pharmaceuticals International. The new firm will specialize in central nervous system therapies and dermatology treatments, with a focus on Canada and emerging markets. The company plans to cut its newly combined workforce by 15% to 20%, or 4,400 people.

Biovail has experienced accounting scandals in recent years, including allegations that it manipulated financial results. The firm is also alleged to have paid doctors to prescribe its blood pressure drug Cardizem LA.