Leading distributor of pharmaceuticals and medical supplies
) recently revealed at the Society of Nuclear Medicine's 59th
Annual Meeting that it intends to inaugurate three cyclotrons in
different states of the U.S.
Cyclotrons are vital in the production process for Positron
Emission Tomography ("PET") imaging agents. With this move, the
company will grow its capability to produce molecular imaging
compounds that facilitate early diagnosis of serious ailments such
as cancer or heart condition.
Cardinal runs a national network of almost 40 cyclotrons. The
company's three latest cyclotrons will be based in Portland,
Oregon, Chicago and Sacramento, California. The concerned
cyclotrons will be the first in Illinois and Oregon while
California will get its third cyclotron. The new cyclotrons will be
housed close to Cardinal's nuclear pharmacies. In addition, these
cyclotrons will aid research in neighboring universities and
The Nuclear Pharmacy Services operation of Cardinal Health runs
a far flung chain of radiopharmacies. This set up is critical for
enabling clinical trials.
Cardinal Health is ranked in the Fortune 500. With over $100
billion in annual sales, Cardinal Health remains one of the largest
distributors of pharmaceuticals and medical supplies in the U.S.,
with a diversified product portfolio, which may partly insulate it
from the current economic uncertainty. The company stands to gain
from the gradual shift in mix from the bulk to the higher-margin
non-bulk sector of the Pharmaceutical segment. It is also riding
the generic wave. Overall, Cardinal is benefiting from a spate of
tuck-in acquisitions and capital deployment strategies.
However, the company faces tough competition across all its
business segments, which may continue to pressure pricing and
margins. Its major competitors in the pharmaceutical supply chain
). We currently have a long-term Neutral rating on Cardinal. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term "Hold" recommendation.
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