The latest figures from the World Health Organization (WHO) show that at least 600 people have died — almost all of them in China — with tens of thousands of confirmed coronavirus cases in dozens of countries.
Demand for products like surgical masks has unsurprisingly risen as the coronavirus continues to gain steam, and medical device companies are grappling with supply chain disruptions as they find different ways to cope with the unpredictable rise of the disease.
In recent days, Boston Scientific (NYSE:BSX) reported that it expects supply chain problems related to the coronavirus to have a $10 million to $40 million impact on first-quarter sales. Becton Dickinson (NYSE:BDX) officials expect a $20 million to $30 million headwind.
Danaher (NYSE:DHR) has supported U.S. Centers for Disease Control efforts to release a panel of two PCR probes and primers that are designed specifically to detect the virus, CEO Tom Joyce said in an earnings call. “We are in the fight here. But the impact of this both in terms of the overall Chinese market… and any of our specific businesses — it’s just far too early to tell,” Joyce said.
Meeting the demands of the pandemic
The pandemic is certainly causing disruptions, but it’s also increasing demand for medical device products such as face masks.
“We’re seeing increased demand for our respiratory protection products, and we’re ramping up our production worldwide, in China, around the world to meet that demand,” Mike Roman, the CEO of 3M (NYSE:MMM), said in a Jan. 28 earnings call.
3M produces the n95 respiratory mask that the BBC cited as “more effective” than an ordinary surgical or medical mask.
“Global demand for supplies used to treat and help protect people, such as respirators, is currently exceeding supply. … 3M is also closely monitoring and responding to any potential impact to our broader supply chain,” 3M spokesperson Tim Post told MassDevice.
BD spokesperson Gwen Gordon said the company has provided product donations, such as catheters, flush products, syringes, sharps and blood collection tubes, valued at a total of $300,000, to the local Red Cross in Wuhan, China.
Becton Dickinson made its donation to outfit two new military hospitals to accommodate coronavirus-infected patients. The company also provided $50,000 in cash to Project Hope, a global health and humanitarian relief organization to supply personal protective equipment (PPE) to frontline health workers of the Renmin and Zhongnan Hospitals of Wuhan University.
In the company’s latest earnings call, CEO Tom Polen said approximately 95% of Becton Dickinson’s products manufactured in China are sold in China, and the company currently has a sufficient inventory of the products it exports from the country to meet the current demand.
Becton Dickinson does not have manufacturing or distribution operations in Wuhan or Hubei province but has extended its Chinese New Year holiday until Feb. 10 at its facilities in Suzhou and Shanghai on the guidance of the Chinese government.
“In terms of business impact, this is still very dynamic,” Polen said. “We are closely watching and balancing two trends: First, we are seeing fewer people going to the hospital to seek standard care. At the same time, we have received and installed several urgent orders for additional BD Max molecular systems, which are being used for coronavirus testing.”
The company spokesperson said the company has an install base of the BD Max molecular systems in China and has installed additional units for coronavirus testing. However, the company does not offer a coronavirus assay, as the labs in China are creating and validating their own using the BD Max platform.
Henry Schein (NSDQ:HSIC) is primarily a distributor of protective equipment and not a manufacturer of the products, although the company works closely with the manufacturers. Spokesperson Ann Marie Gothard said the company, based on recommendations from the WHO and CDC, compiled a list of masks, face shields, gloves, isolation gowns and other infection prevention products for customers who are seeking protective items for their practice.
The company confirmed that it has seen an uptick in demand for masks through its dental and medical distribution business in Asia, and in the U.S. Henry Schein is also the private-sector founder and lead of the Pandemic Supply Chain Network (PSCN), which WHO mentioned has been vital in helping the organization address the coronavirus outbreak.
Henry Schein, along with several other companies, also contributed to a large donation of supplies to China orchestrated by MAP International. (3M also participated.) Henry Schein clarified that it made its donation in September, prior to the coronavirus outbreak. However, according to a news release, more than 1.3 million masks were donated, along with 280,000 pairs of nitrile gloves and 10,758 protective suits.
Cardinal Health (NYSE:CAH) is another company closely monitoring the situation.
“We are engaged with our manufacturing partners to anticipate and meet ongoing customer needs,” said Cardinal Health spokesperson Erica Lewis. “We are taking steps to monitor our inventory to support existing customers and their demand based on recent historical needs. Our PPE products are currently at healthy inventory levels, but the coronavirus situation is dynamic.”
