Cardinal Health Inks Xofigo Manufacturing Deal with Bayer - Analyst Blog

Healthcare services company Cardinal Health, Inc. (CAH) has signed a 15-year agreement with Bayer Healthcare – a subsidiary of Bayer AG (BAYRY) – for the contract manufacturing of Xofigo. Xofigo, an alpha-particle-emitting radioactive therapeutic agent, is used to treat patients with castration-resistant prostate cancer, symptomatic bone metastases and no known visceral metastatic disease.

Per the agreement, Cardinal Health will build a state-of-the art, 64,000 square foot facility in Indianapolis, dedicated exclusively to the manufacturing of Xofigo. Products manufactured at this facility will be primarily distributed in the U.S. and Canada. Xofigo currently has a single manufacturing site at Norway, which is responsible for global supply of the product.

Following an approval from the U.S. Food and Drug Administration (FDA), Xofigo was launched in the U.S. in May 2013. Presently, Cardinal Health is the sole distributor of Xofigo in the U.S.

The new Cardinal Health manufacturing facility will be built near and leverage the capabilities and talent of Cardinal Health's existing Indianapolis radiopharmacy, which is one of the two U.S. locations authorized by Bayer HealthCare to distribute Xofigo. The manufacturing facility, slated for completion in 2017, will be supported by around 85 employees, including specialized manufacturing roles, chemists, engineers and other professionals.

Since the product's U.S. launch, Cardinal Health has played a central role in distributing Xofigo to medical facilities. In August this year, Bayer Healthcare revealed that over 1,000 cancer treatment sites in the U.S. have received the appropriate licensing from the U.S. Nuclear Regulatory Commission (NRC) or appropriate Agreement State to administer Xofigo.

By way of the new agreement with Bayer Healthcare, Cardinal Health intends to develop innovative services to expand the use of radiopharmaceuticals in the U.S. and Canada.

Currently, Cardinal Health carries a Zacks Rank #2 (Buy).

Other stocks worth considering in the medical/dental supply industry include Patterson Companies (PDCO) and Steris Corp. (STE). Both the stocks carry the same Zacks Rank as Cardinal Health.