Syncor loses Novation contract

January 13, 1999

Radiopharmaceutical firm Syncor International lost one of its biggest customers when group purchasing organization Novation of Dallas switched its radiopharmaceutical supply contract to Nycomed Amersham. Sales to Novation and its members account for some

Radiopharmaceutical firm Syncor International lost one of its biggest customers when group purchasing organization Novation of Dallas switched its radiopharmaceutical supply contract to Nycomed Amersham. Sales to Novation and its members account for some $112 million of Syncor's revenues, but the Woodland Hills, CA, company believes that the revenue shortfall it experiences from the switch may ultimately be far less than that.

Novation is a joint-venture GPO established by VHA and University Health Consortium last year. Syncor has a GPO contract with VHA, as well as individual relationships with VHA and UHC members, representing a total of about $112 million in revenues. Yet despite losing the Novation contract, Syncor believes it will retain the majority of its revenues from Novation members.

The company explained that $42 million of the $112 million in sales is outside the GPO agreement that was awarded to Princeton, NJ-based Nycomed Amersham and therefore will not be affected. Of the remaining $70 million, Syncor believes only $15 million could be lost.

Syncor has long-term contracts with individual hospitals in the VHA and UHC networks, which represent about $27 million in sales. In addition, Syncor also believes that Nycomed Amersham does not have the nationwide service network needed to serve Novation members, and that more than 25% of the $70 million committed base of clients will be outside of Nycomed Amersham's network. Syncor also emphasized its exclusive distribution rights to Cardiolite, a cardiac imaging agent that represents about 40% of current sales to Syncor customers within the VHA and UHC networks.