• Bristol Myers Squibb, AstraZeneca, Eli Lilly and other pharmaceutical companies have spent some $10 billion on radiopharmaceutical acquisitions and partnerships over the past year.
• Drugmakers are trying to replicate the success Novartis has found with Pluvicto and Lutathera.
• Radiopharmaceuticals are currently available for some neuroendocrine tumors and prostate cancer. They could one day be used for numerous cancers.

Drugmakers are betting that delivering radiation directly to tumors will become the next big cancer breakthrough. 

Bristol Myers Squibb, AstraZeneca, Eli Lilly and other pharmaceutical companies have spent some $10 billion on deals to acquire or work with radiopharmaceutical makers. They've snapped up smaller upstarts to get their hands on technology that, while in its infancy, could treat numerous cancers. 

"Any large company that has a business presence in oncology or for whom oncology is an important therapeutic category will probably need exposure in this area one way or another," said Guggenheim Securities analyst Michael Schmidt.

Two radiopharmaceuticals from Novartis are already available. Another few dozen are in development, according to Schmidt's count. It's hard to estimate the total market opportunity because there are so many possible cancers the drugs could treat, he said.

Schmidt predicts the category could grow to a low end of $5 billion in revenue if the technology stays limited to treating a few types of cancer like prostate and neuroendocrine tumors, to as much as tens of billions if it's shown to be effective in more cancers.

The drugs work by attaching radioactive material to a targeting molecule that searches for and attaches to a specific marker on cancer cells. The trick is finding markers that exist on cancer cells but not healthy cells. That can allow the treatment to deliver radiation to cancer cells and spare the rest of the body from the level of damage that comes with many cancer drugs. 

Proving the technology could work both scientifically and financially has taken time. The first radiopharmaceuticals were approved in the early 2000s. But interest from large pharmaceutical companies didn't pick up until recently. 

Making the drugs requires complex manufacturing and logistics, two major drawbacks. Radioactive material degrades quickly, so patients need to be treated within days of their treatment being made. 

Pharmaceutical companies proved they could manage complex, time-sensitive drugs like CAR-T for blood cancers or gene therapies for rare diseases. Then Novartis showed those strategies could be applied in radiopharmaceuticals. 

The Swiss pharmaceutical giant won approval in 2018 for a radiopharmaceutical drug called Lutathera for a rare type of cancer in the pancreas and gastrointestinal tract. Then in 2022, Novartis secured another approval in the treatment Pluvicto for prostate cancer. Combined, the drugs are expected to reach about $4 billion in sales by 2027, according to consensus estimates from FactSet. 

Those successes sparked broader interest in radiopharmaceuticals. 

"We took all that together and thought, we should do something, we need to do deals here," said Jacob Van Naarden, president of Eli Lilly's oncology business. 

Lilly acquired radiopharmaceutical maker Point Biopharma last year for about $1.4 billion, and also signed a few partnerships with companies developing the treatments. One of the most important factors during Lilly's initial search was whether companies were prepared to manufacture the drugs, Van Naarden said. Radiopharmaceuticals aren't easy to make, and Lilly wanted to make sure any initial acquisition could produce the drugs themselves instead of outsourcing the work. 

Manufacturing was also a key component in Bristol Myers Squibb's $4.1 billion acquisition of RayzeBio, said Ben Hickey, RayzeBio's president. At the time of the acquisition, RayzeBio was nearing completion of a factory in Indiana and had secured its own supply of radioactive material needed to develop the experimental drugs in its pipeline. 

"It was clearly one of the criteria to make sure that we had our destiny within our own hands," Hickey said. 

Novartis has shown why that's so important, as the company initially struggled to make enough doses of Pluvicto. It's investing more than $300 million to open and expand radiopharmaceutical manufacturing sites in the U.S. so it can produce the drug and get it to patients quickly. The company is now able to meet demand for the treatment, which involves careful planning for distribution. 

Each dose carries a GPS tracker to ensure it goes to the right patient at the right time, according to Victor Bulto, president of Novartis' U.S. business. Novartis drives doses to destinations that are within nine hours from the factory to minimize the risk of disruptions from storms, Bulto said. 

Doctors and patients on the receiving end also feel the complexity. 

Bassett Healthcare Network in upstate New York needed to upgrade its medical license to handle radioactive material before administering Lutathera and Pluvicto, said Dr. Timothy Korytko, Bassett's radiation oncologist in chief. A certified specialist needs to administer the drugs, which are given intravenously.

It can take a few weeks from prescribing a radiopharmaceutical to administering one. For Pluvicto, patients come in once every six weeks for up to six treatments.

Radiopharmaceuticals start decaying once they're made, so they're only good for a few days.

Ronald Coy knows how important it is to make it in for his appointments. Coy, a retired firefighter who's been battling prostate cancer since 2015, drives more than an hour through upstate New York to receive Pluvicto at Bassett. Coy hasn't had any issues so far, but he worries a snowstorm could derail one of his appointments between now and the end of January. 

"Hopefully we won't get any major storms between now and then or if we do, it's a week before I go," Coy said.

When Coy comes home from treatment, he needs to take precautions like staying away from his wife Sharon so she's not exposed to radiation. He drinks plenty of water to remove extra radiation from his body. He doesn't mind little inconveniences for a few days if it means fighting his cancer.

For Novartis, investing in the infrastructure to produce and distribute radiopharmaceuticals would be worthwhile for Pluvicto and Lutathera alone, Bulto said. But it's even more attractive because of the potential to treat more cancers. He gives the example of Novartis' work to develop a drug for a marker that's found across 28 different tumors, including breast, lung and pancreatic cancers. 

"If we were able to put all these learnings that we've developed from a manufacturing distribution in service of patients with lung cancer, patients with breast cancer, and potentially show these levels of meaningful efficacy and tolerability, we're talking about a very big potential impact on cancer care. And, of course, a very viable business as well," he said. 

At this point, it's still an if. The field is in its early days, executives say, and the promise of radiopharmaceuticals beyond the current cancers they treat still needs to be proven.

"If we can be successful in expanding the target and tumor type repertoire, this could be a very big class of medicines," Eli Lilly's Van Naarden said, adding that at this point it's hard to say if the class will be "super important" or "just important."

One opportunity Bristol Myers Squibb sees is combining radiopharmaceuticals with existing cancer drugs like immunotherapy, said Robert Plenge, Bristol's chief research officer. AstraZeneca shares that vision.

AstraZeneca spent $2 billion to acquire Fusion Pharmaceuticals earlier this year. Susan Galbraith, the company's executive vice president of oncology research and development, points to existing regimens that combine immunotherapy with radiation. 

How large AstraZeneca's radiopharmaceutical portfolio ultimately becomes depends on its initial prostate cancer program and other undisclosed targets already in the works, Galbraith said. But she thinks the technology will become an important part of cancer drugs in the next decade.

It could take years to understand the true potential of the technology, as many experimental drugs are still in the early phases of development. One outstanding question is whether other radiopharmaceuticals are as safe and well tolerated as Novartis' Pluvicto, especially ones that use other types of radioactive material, the Guggenheim analyst Schmidt said. 

Large pharmaceutical companies aren't waiting to jump into the race. Stories like those from Coy encourage them that the work will pay off. 

Over almost 10 years, Coy has undergone multiple treatments for prostate cancer that has spread to his bones. After just one Pluvicto treatment earlier this year, bloodwork showed Coy's cancer level plummeted. 

Not everyone responds that well to Pluvicto, and things could always change for Coy. But for now, Coy feels fortunate that he's among the group that responds well to Pluvicto. That's worth the drives and the precautions for him. 

"I feel very fortunate every day that I am – as it stands now – I'm part of the third where this is working really good for me," he said.

— CNBC's Leanne Miller contributed to this report.