Big Drugmakers Warn About Coronavirus Impact on Business
March 01 2020 - 11:29AM
Dow Jones News
By Jared S. Hopkins
Some of the world's biggest drugmakers have begun warning that
their businesses could be affected by the spread of the
coronavirus.
AstraZeneca PLC, Merck & Co. and Pfizer Inc. are among the
companies that said recently the epidemic could affect supplies for
certain drugs or sales, depending on how long the epidemic
lasts.
To get ahead of any disruptions to supplies from China, some
pharmaceutical companies have begun looking for alternative sources
of drug ingredients and supplies, according to industry officials
and experts.
Drugmakers have begun discussing the potential impact after
saying for weeks they were monitoring their distribution lines and
had sufficient supply. Companies typically avoid discussing their
supply chains, but they have been under pressure from Wall Street
to provide more information as the epidemic spreads, especially
since it started in China, a major source of drug ingredients and a
fast-growing market for medicines.
"Our whole industry is in one way or other way connected with
China, but you would expect us to be much better placed," Mylan NV
President Rajiv Malik said Thursday on a conference call with
analysts and investors.
Some Mylan products could be in short supply if "the situation
persists" for another few months, Mr. Malik said. He said Mylan's
top 25 products don't depend on China, however, and expressed
confidence in the company's ability to employ alternative sources
for drug ingredients.
Pfizer said in a filing on Thursday that the virus could hurt
its operations, including manufacturing and supply chain, and could
negatively impact its financial results but that it depends on
future developments of the outbreak.
Pfizer said the majority of its products and raw materials are
sourced from countries besides China, but some does come from
China, though the company said it hasn't seen a disruption to
supplies so far.
Teva Pharmaceutical Industries Ltd. bases its manufacturing
network for its drug ingredients, known as active pharmaceutical
ingredients or API, out of Europe and India, not China, according
to Chief Executive Kare Schultz.
"We do use some raw materials and APIs that come out of China
[but] in some cases we have dual supply so if we can't get
materials from China we can get them from somewhere else," he said
in a recent interview.
The threat that the novel coronavirus poses for prescriptions
has renewed a cause for concern because of China's role as a big
supplier of drug ingredients.
"There is no such thing as a simple supply chain anymore," said
Steven Lynn, a former FDA official who consults with drugmakers on
quality and compliance. "Things are coming from all over the world.
If one part of that breaks down, then you're scrambling."
The Food and Drug Administration said Thursday a drug has gone
into shortage because of difficulties obtaining an ingredient from
a site affected by the coronavirus. It didn't disclose which drug
or its manufacturer.
How much multinational drugmakers depend on China-sourced
ingredients is unclear. Policy makers often cite a figure that 80%
of drug materials are imported overseas, but the FDA said it can't
track how much is from China.
China has also emerged in recent years as one of the biggest
markets for some major drugmakers. Drug sales in China totaled $137
billion in 2018, and are expected to rise 3% to 6% annually for the
next several years, according to health-care data firm Iqvia.
AstraZeneca generated 21% of its sales in China last year.
Releasing its forecast for 2020 performance, the company said last
month it expects an unfavorable impact from a slower China business
lasting up to a few months due to the novel coronavirus.
Merck said in a securities filing Wednesday its first-quarter
sales will suffer due to the epidemic in China, although not enough
to be material. It said it was unclear if the outbreak will affect
sales for the rest of the year.
Merck also said the epidemic has had a limited effect on its
supplies of raw materials coming from China and ability to ship
medicines into the country.
Joseph Walker and Denise Roland contributed to this article
Write to Jared S. Hopkins at jared.hopkins@wsj.com
(END) Dow Jones Newswires
March 01, 2020 11:14 ET (16:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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