Coronavirus May Disrupt U.S. Pharma/Life Sciences Supply Chain

Fears have been raised about the FDA’s ability to monitor and help ensure compliance with good manufacturing standards.  There are also concerns regarding supply and demand needs in the United States, especially when the increased demand of China is included.

Prior to the coronavirus outbreak, the FDA had reported to Congress that it has insufficient staffing to meet its oversight duties in China.  Oversight work is also limited by its inability to conduct surprise inspections in China as well as by the substantial language barrier.  With the coronavirus outbreak, FDA agency staff are leaving China.  All travel by FDA agents to China has been cancelled. At this point, due to the stop in nonessential travel to China by U.S. citizens, it seems likely that the conduction of inspections will be limited to those FDA personnel who are based in China.  This significantly limits the FDA’s ability to patrol compliance and conduct the necessary inspections, impacting medical products, drugs and medical devices.

Newly approved drugs must have inspections when entering the United States however companies may continue to ship drugs which have already been approved by the FDA.  Without inspections, however, the quality of the drugs cannot be validated.  The FDA does have another tool that can help safeguard public health.  If the FDA were to receive information regarding a potential public health risk from a Chinese facility that it was unable to inspect due to the coronavirus outbreak, the FDA could issue an import alert. The FDA import alert could prevent the products from entering the United States, a temporary safeguard until FDA inspections could resume.  Also, the FDA could test and sample drug product at ports of entry to the United States.  The FDA could also try to get data remotely from manufacturers.

Medical Devices

According to recent data, there are 11,529 class II and class III medical device manufacturers in China, primarily in four geographic areas.  Each has experienced incidents of the coronavirus outbreak.  Life science industry experts anticipate that most of the 11,000+ manufacturing companies are or will be affected as employees will effectively be placed on leave due to quarantines, preventing any production of medical devices.  In addition, many of the medical device manufacturers likely have at least some staff members who have traveled to Hubei province or the city of Wuhan.

Most of the flow from China to the U.S. is of either intermediate manufactured product or lower-value finished product rather than high value finished product.  These products range from hearing aids, wheelchairs and dentures on the low end to high end consumables such as diagnostic imaging and endoscopy devices.  Much of the lower end medical device goods can be purchased from other manufacturers around the world.

Personal Protective Equipment (PPE):  Masks, Respirators, Safety Goggles, Surgical Gowns, Gloves

With the concern about and spread of the coronavirus, medical professionals, police and the public are wearing masks and respirators in public in huge volumes. China is the largest provider of masks and respirators to the rest of the world. Because China is using more personal protective equipment because of the outbreak, it seems likely that fewer masks will be available to other countries that have been regular customers of Chinese manufacturers, including the United States.

Currently, 95% of the surgical masks and 70% of the respirators used in the United States are made overseas.

 It was recently reported that China has escalated the production of masks to more than 20 million masks per day.  According to the Chinese foreign ministry, safety goggles and masks were in short supply within China and an international appeal for more was issued.  The demand for PPE has increased worldwide, especially since this is the height of flu season. 

Another recent newsworthy event is the recall of contaminated surgical gowns by Cardinal Health valued at $96 million.  The product recall involves nearly 9 million surgical gowns manufactured between September 2018 and January 2020 in a manufacturing plant in China.  Worries about potential cross-contamination of the surgical gowns and procedure packs sparked the recall, 7.7 million were distributed to 2,807 healthcare facilities across the U.S.  The result was a shortage which resulted in delays in surgical procedures at some healthcare facilities across the country.

Medical and hospital associations are working with the U.S. Department of Health and Human Services to plan in advance, secure supplies of PPE and keep up to date on issues involving shortages and supply chain risks and disruptions.

Nutritional Supplements

As with generic drug ingredients, a large proportion of ingredients for nutritional supplements originate in China.  Because of the recent trade war, some manufacturers of supplements advance purchased ingredients and are now stocked with raw materials.  Wuhan is situated in an area well known for sourcing of amino acids and vitamin C.

American consumers tend to be unaware that many of the ingredients found in dietary supplements.  To date, there is no concern that ingredients could be contaminated with the coronavirus.

Summary

Let’s face facts.  China has been a dominant force in the manufacturing of life sciences and healthcare products for many years and will likely remain so for years to come.  The future of life sciences and healthcare logistics will involve the ability to continue to transport goods across country borders to satisfy consumer needs.  With the fact that 97 percent of all antibiotics and 80 percent of the active ingredients needed to make drug products originate from China, the United States needs to pay careful attention to the impact and extent of the coronavirus.  Much has come to light since the outbreak started.  Government officials, industry trade associations and the public are becoming increasingly aware of the need for sophisticated supply management and demand planning for the products that have such a tremendous impact on the health and safety of people across the globe.

With the coronavirus outbreak, transportation and logistics have become complex as Wuhan and Hubei were closed to quarantine the spread of COVID-19 and travel to and from China restricted.  Concern for both the public and patient outcomes for those suffering from the virus were dominant.  Defining a supply chain strategy for the life science industry in China while dealing with the complexity of worker shortages, minimal transportation and logistics in and out must be done so as to deal appropriately with conditions as the coronavirus spreads is highly problematic and would benefit from the use of technology tools.

Proper supply chain planning will only take us so far.  The dominant concentration of production by one country, the same country experiencing the largest incidence of the COVID-19 outbreak is dangerous for all other countries, putting their healthcare supply chains at risk.  Media and periodicals across the life sciences industry are brimming with articles from those across the world about coronavirus and its implications for global trade and the life science supply chain. Join the conversation.  Being aware of the issues helps you be forewarned and better able to react and safeguard your part of the life science supply chain.