Lantheus Medical Imaging Stakes Future on Innovation After Generic Hit to Key Product

2/16/10

When Don Kiepert became chief executive of Lantheus Medical Imaging about two years ago, he says, he took over a business that was looking down the barrel of a generic threat to one of its top-selling products—and whose operations had been largely overlooked by its previous owner, the drugmaker Bristol-Myers Squibb (NYSE:BMY).

Kiepert has attacked the first problem, generic competition to the firm’s technetium Tc99m sestamibi (Cardiolite) injections for medical imaging, by securing supply agreements with key customers and investing in marketing the product’s well-known brand. And last month, the North Billerica, MA-based company launched its latest imaging product, gadofosveset trisodium (Ablavar), a contrast agent used in diagnosing cardiovascular diseases, after paying $28 million for certain rights to the technology last May to the now defunct biotech firm Epix Pharmaceuticals, of Lexington, MA.

Yet Lantheus still faces major challenges. While the business’s roots date back to 1956, Lantheus is only a two-year-old company, and its name isn’t as well known among key physicians as Bristol-Myers is. (The company name was changed from Bristol-Myers Squibb Medical Imaging to Lantheus in January 2008, when private equity firm Avista Capital Partners, of New York City and Houston, purchased the business for $525 million from Bristol-Myers in a leveraged buyout.) Generic competition to the sestamibi product has eaten into the company’s revenue stream, but the CEO says that the total number of workers at the company today is about 740, just 10 fewer workers than  when Avista bought the business.

Lantheus does not publicly reveal its financial records, so it’s tough to know exactly how the business is performing. Like many companies purchased through LBOs, Lantheus must use a portion of its revenues to pay down the debt used to finance Avista’s purchase of the business. However, Kiepert says that the company is almost two years ahead of schedule in paying down its undisclosed debts from the buyout. And despite those debts, Avista has supported efforts at the company to invest in brining new products to market.

“We’re investing nearly … Next Page »

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