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UPDATE 1-Hospitals brace for shortage of medical isotopes

* Shuttered reactor in Canada a big U.S. supplier

* Companies scrambling to make up for shortfall

* Many medical diagnostics tests “imperiled” (Adds comments from reactor official, paragraphs 17-18)

CHICAGO, May 21 (Reuters) - Makers of medical isotopes used in scores of diagnostic imaging tests are scrambling to find new suppliers after Canadian health officials shut down a nuclear reactor last week that produces a third of the world’s supply.

Atomic Energy of Canada Ltd closed down its 50-year-old reactor at Chalk River, Ontario, after a small leak of heavy water, used as part of the nuclear reaction.

It expects the reactor to remain out of operation for more than a month, but some analysts think it could be many months.

Only five nuclear reactors in the world produce molybdenum-99, or Mo-99, which is used in diagnostic tests for cancer, heart disease and a host of other ills.

“It’s going to cause a shortage and it’s going to cause a price rise. Those are unavoidable negative consequences,” Stephen Brozak, president of WBB Securities in New Jersey, said in a telephone interview.

For patients in North America, the shutdown will have a dramatic impact, said Robert Atcher, president of the Society of Nuclear Medicine.

“That reactor supplies about half of the clinics and hospitals in the United States,” he said. “About 8 million of our studies are imperiled because that reactor is offline.”

Lantheus Medical Imaging, a private Massachusetts-based company that packages molybdenum-99 into lead-lined containers called generators, got most of its supply from Canada.

A medical isotope is a very small quantity of radioactive material used to perform nuclear medicine imaging tests. Isotopes are mixed with different solutions and injected into patients, where they give off energy that is read by special cameras.

Bill Dawes, a vice president of manufacturing and supply, said the company has replaced some of its supply through a deal with a reactor in South Africa.

“It’s going to mean that a large percentage of the procedures that would normally be completed and a large number of the patients that would be served will be left unserved for the duration of this shutdown,” he said, adding that some patients “will perish.”

RECURRING PROBLEM

Dr. Michael Graham, director of nuclear medicine at the University of Iowa, said in past reactor shutdowns, remaining reactors and generator manufacturers have shipped some Mo-99 from Europe and South Africa so hospitals can “limp along.”

MDS Inc MDS.TO, whose MDS Nordion division has an exclusive agreement to distribute Chalk River's medical isotopes, said it is working to secure additional supply, but expects a significant global shortage of isotopes.

The shutdown is the second in less than two years at Chalk River. A 2007 production halt cut MDS’ profit by $9 million.

Joanna Schooler, a spokeswoman for Covidien Ltd COV.N, which supplies generators to about half of the U.S. market, said her company's supply of Mo-99 comes primarily from a reactor in Petten, the Netherlands. She said Covidien can get isotopes from reactors in Belgium, France and South Africa.

Bill Pilkington, vice president in charge of the Chalk River reactor, told reporters on a conference call that Atomic Energy of Canada Ltd expects the plant to be offline for more than a month.

“As to what it might be beyond that, that really depends on what we find in our inspections,” he said.

Meanwhile, doctors are bracing for another shortage.

Graham said the University of Iowa normally gets two generators a week. Because Mo-99 has a half life of just 66 hours, supply disruptions have a quick impact.

“If we don’t get another generator next week, by the end of the week we will be unable to do any (nuclear medicine) studies,” Graham said.

Doctors will have to use less efficient and often more costly imaging tests, Graham said, and in some cases, there is no good substitute.

Additional reporting by Allan Dowd in Vancouver; Editing by Maggie Fox and Will Dunham

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