Dutch Reactor Restarting Sooner Than Covidien Expected

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; [e-mail]