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Press Clipping / Feb 04, 2020

Coronavirus puts drug chemical industry on alert

C&EN, February 4, 2020

Firms signal preparedness, but warn that prolonged plant closures and travel restrictions may cause significant disruptions

Major drug companies have issued statements in recent days assuring the public that their inventories are adequate in the face of supply chain threats stemming from China’s coronavirus outbreak. Suppliers of active pharmaceutical ingredients (APIs) are also assuring customers that they are prepared for temporary interruption in the supply of key ingredients from Chinese firms.

However, API makers in Europe and the US warn that supply disruptions could result from a protracted delay in restarting production at plants closed in recent weeks by the Chinese government or prolonged transportation restrictions.

James Bruno, president of the consulting firm Chemical and Pharmaceutical Solutions, notes that travel restrictions are already interrupting business with Chinese suppliers. “First of all, nobody is going to be able to get to China,” he says, “so all the audits are going to be canceled.”

Bruno adds that the travel restrictions will prolong plant closures stemming from Chinese New Year celebrations, which began on Jan. 25 and are scheduled to run to Feb. 8. “These guys have gone home and may not be able to get back to where they were working,” he says.

The initial quarantine of Wuhan, the city first impacted by the virus, has broadened to include travel bans in other major cities, Bruno notes. “It’s not just Wuhan. It’s China.”

Bruno says he has received calls from clients asking where they might find alternative sources of materials purchased from China. “The good news is that most of the people dealing with China tend to have inventory,” he says. “But if this doesn’t straighten out in the next 3 months, we could have some real problems with supply disruption.”

 

Guy Villax, CEO of the pharmaceutical chemical maker Hovione, says 50 people did not show up for work on Feb. 4 at the company’s plant in Macao, which employs 200. “Twenty-five of them live across the border in China, and China’s instructions are to stay at home,” he says. “But the issue is not whether the plant is producing; the real question is whether there will be transport to move goods around. Right now the head of the plant doesn’t know if he’ll get supplies from China.”

 

Asymchem, a pharmaceutical chemical manufacturer in Tianjin, China, approximately 1,160 km from Wuhan, also notified customers of contingencies related to the virus outbreak. The company told customers on Jan. 30 that it had pre-stocked materials to support production for at least a month and that it has not experienced delays on projects. Asymchem reports that 45 employees, about 1% of its workforce, were quarantined by authorities after traveling during the holiday. The firm says it expects its plants to open on Feb. 10.

“We will closely monitor the situation as it evolves, and take action proactively for assurance of supply,” Asymchem Senior Vice President Elut Hsu says in the letter.

Sources agree that the full impact of prolonged restrictions in China is difficult to gauge. According to a recent report by the US Food and Drug Administration, China is home to approximately 13% of the 1,788 facilities that manufacture APIs for drugs marketed in the US.

Given the reassuring reports from drug companies and API producers, there is no reason to fear a significant disruption in the pharmaceutical supply chain, says industry consultant Steven Lynn, a former head of the FDA’s quality compliance office.

“Fearmongering is not something we should be doing,” he says. But API suppliers should take advantage of a short-term disruption to review supply chain and logistics vulnerabilities. “Churchill had a good quote,” Lynn says. “‘Never let a good crisis go to waste.’”.

 

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