Dutch Reactor Restarting Sooner Than Covidien Expected
13 February 2009 - 7:24AM
Dow Jones News
A nuclear reactor in the Netherlands used to produce medical
isotopes is restarting operations earlier than Covidien Ltd. (COV),
which has been stung by a long outage there, had recently
projected.
The restart lifts a cloud that has hung over Covidien's nuclear
medicine operations, which depend on the reactor in the town of
Petten to create material used in medical scans.
The Nuclear Research & Consultancy Group, which operates the
reactor, said in a release Thursday that the Dutch Council of
Ministers granted permission to restart. The group said it was
making final preparations to resume operations.
"With the restart of the [reactor], it is expected that within a
few days there will be sufficient availability of medical isotopes
for the treatment of patients world wide," the operator said.
Covidien officials said last month that they expected the
reactor, which shut over the summer, would remain down until May.
Spokesman Eric Kraus said Covidien is optimistic about the
restart.
Shares of Covidien were recently down 36 cents at $38.40.
Leerink Swann analyst Rick Wise said, however, that they should
respond positively to news of the early reactor restart, which
could mean "modest upside" to the firm's sales and earnings
projections for Covidien's fiscal year, which runs through
September.
The Petten outage has weighed on sales in Covidien's
radiopharmaceutical business. The reactor makes a product called
molybdenum-99, which decays into an isotope called technetium-99m
that is injected into patients to create a traceable signal for
medical scans
There are no U.S. reactors producing this material - which has a
very short lifespan - despite heavy use in this country, and
reactor outages are very disruptive. According to the reactor
operator, the Petten plant produces 30% of the world demand for
medical isotopes.
Covidien recently announced plans to develop a U.S. source for
molybdenum-99 with Babcock & Wilcox, which is a unit of
McDermott International Inc. (MDR). It will likely take several
years, but could eventually address continuing supply problems
triggered by international outages.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com