* Market demand for moly-99 isotope uncertain
* Customers diversifying supply source
(In U.S. dollars)
By Solarina Ho
TORONTO, Sept 15 Canada's MDS Nordion MDS.TO,
one of the world's largest suppliers of medical isotopes, said
on Wednesday that market demand has become uncertain following
the shutdown of a key isotope-producing nuclear reactor that
forced MDS's customers to diversify supply.
MDS Nordion's nuclear imaging and radiotherapy segment took
a severe hit after the Atomic Energy of Canada's Chalk River
nuclear reactor in Ontario was shut down in May 2009 due to
safety concerns. The reactor resumed operations last month.
Chalk River, which supplies isotopes for MDS Nordion's
imaging and radiotherapy products, is one of the few reactors
in the world that produce commercial quantities of
molybdenum-99, the most prominent isotope used in nuclear
medicine. It is the parent isotope for technetium-99m, used in
most nuclear medicine procedures globally.
"Our initial expectation is that our demand will trend
lower than historic levels and market pricing will be higher,"
MDS Nordion Chief Executive Steve West said during the
company's quarterly conference call with analysts.
"In terms of market share, the overiding issue is first
what the total demand is going to be. And I think it's
uncertain for everybody to really, at this moment, predict
Customers are diversifying supply sources to reduce their
reliance on a single source in times of extended shortages, he
said, noting that multi-source contracts are here to stay.
"That is the most appropriate way for the industry to have
MDS Nordion said that it is also taking steps to secure
supplemental sources for its medical isotope supply.
The medical community also implemented alternative
procedures and methodologies during the Chalk Rover outage so
that they could use medical isotopes more efficiently.
"To offset that, you have to get commensurate price
increases that will stick," said analyst David Windley of
Jefferies & Co, noting that MDS seemed to believe that market
hopes for a three-fold price increase were overly optimistic.
Ottawa-based MDS Nordion reported a narrower third quarter
loss late Tuesday evening. It had a loss from continued
operations of $18 million, or 27 cents a share, in the quarter
ended July 31, compared with a profit of $9 million, or 8 cents
a share, for the same period a year earlier.
West said the company's current strategy is to strengthen
its core isotope business, but he signaled that it is exploring
"In the coming months, you can expect us to talk more about
that...we just need a bit more stability in our existing core
business before we address some of those issues," West said.
(Editing by Peter Galloway)