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Computer Sciences Tightens Health Care Connection

SAN FRANCISCO -- Computer Sciences' (CSC - Get Report) $365 million takeover of First Consulting (FCGI) is the largest in a string of similar deals to take information technology services firms deeper into the health care and drug industries.

Computer Sciences agreed to pay $13 a share for First Consulting, which had 20 outsourcing jobs with 43 hospitals and other health care facilities at the beginning of the year. First Consulting shareholders must still approve the deal.

First Consulting has been in a transitional state since 2005, as its looks for ways to pare costs while supplementing revenue lost after project terminations with New York Presbyterian and UMass Memorial. After losing these contracts, its 2006 revenue fell 5% to $278 million.

At the same time, CSC has been expanding its health care business and recently took over a $3.7 billion project with the U.K.'s National Health Service agency.

As IT services firms develop expertise in specific industry sectors, many have eyed the health care and pharmaceutical sector because of its growing technology needs and insulation against recessionary climates. Hospitals are increasingly "wired" environments with stringent requirements for confidentiality of patient records.

Also, drug safety procedures and reporting requirements for clinical trials have increased the need for IT systems to help spot drug interactions and side effects.

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