Select Pharma, the Dunblane-based laboratory testing company, has been acquired for up to £7.3million by main market-listed Source Bioscience.

It represents a £5million windfall for majority shareholder David Clapperton whose wife Morag is also on the board, and a £1.8m payout for Gerald Higgins, chairman since 2013.

Privately-owned Select, founded in November 2009, provides stability storage and testing laboratory services, and three years ago it moved its testing facilities to the BioCity Scotland business incubator site at Newhouse in Lanarkshire.

The company doubled revenues to £2m and net assets to £1.3m over the two years to March 2014, and lifted pre-tax profit from £453,000 to £578,000. Its cash flow from operations more than doubled to £643,000 between 2013 and 2014, and it is debt-free.

Source, based in Nottingham and with a market capitalisation of £46million, said the Scottish firm had continued on the same track in the past year. “Select has grown consistently in recent years to become a leading European provider of stability testing with attractive, sustained operating margins and a robust, growing sales pipeline.”

Select's customers include contract drug manufacturers, European generics distributors and UK and EU importers of medicinal products, amid growing demand for accredited testing to support drug import licence applications, and it is located close to Source Bioscience's Scottish base.

Source has raised £4.4m from investors in a placing, and £3.5m in new debt, to finance the £7.3m in cash, of which £600,000 is deferred for two years.