Blockbuster weight-loss drug provide hit in commerce shutdown

As a port strike stretching from New England to Texas halted almost half of all commerce coming into the U.S., customs information exhibits that crucial medical units and drug parts for the booming, costly weight-loss and diabetes medicine from Novo Nordisk and Eli Lilly — Ozempic, Wegovy, Mounjaro and Zepbound — are among the many commerce casualties within the ILA union port work stoppage.

Payments of lading, the digital receipts of freight containers, present that the supply mechanisms for insulin and weight-loss medicine depend on East Coast ports for incoming commerce.

“Novo Nordisk and Eli Lilly are both heavily reliant on the Port of Norfolk,” mentioned William George, director of analysis at ImportGenius, which tracks the customs information.

Prior to now yr, Novo Nordisk has imported by way of Norfolk 419 twenty-foot equal unit, or TEU, containers value of prescribed drugs and injection units that include semaglutide, a compound in its branded weight-loss medicine, based on George. “Novo fine syringes commonly used for insulin injections come into the U.S. by ocean freight as well,” he mentioned.

Novo Nordisk has raked in almost $50 billion in gross sales from Wegovy and Ozempic, with most of that income coming from the U.S., its CEO mentioned in latest testimony earlier than the U.S. Senate.

A Novo Nordisk spokesperson mentioned in an electronic mail to CNBC that the corporate has mitigation plans in place to reduce or forestall any manufacturing disruption attributable to seaport strikes. “We plan to ship our products to and from the U.S. via airfreight,” the spokesperson mentioned.

An Eli Lilly spokesperson mentioned the corporate doesn’t focus on the main points of its exterior provider relationships.

Dennis Monts, world chief business officer at PayCargo, mentioned air sector volumes strengthened in September, peaking about two weeks in the past. 

“We are watching October numbers anticipating a surge of air freight for fast-moving and perishable items such as produce, seafood, medical supplies and other just-in-time inventories,” Monts mentioned.

Noushin Shamsili, CEO and president of Nuco Logistics, which makes a speciality of pharmaceutical imports and exports, advised CNBC on Monday that the strike comes at a crucial time for stock replenishment for the drug sector. “Almost all of this industry is just on time,” mentioned Shamsili. “Raw materials are being brought in to complete drug manufacturing.”

Roughly 48% of the energetic pharmaceutical elements, or APIs, used within the U.S. are imported from India. With out these APIs, medicines can’t be produced. APIs are additionally manufactured in Europe, and the U.S. factors of entry for these are the East Coast ports.

A few of these APIs are crucial parts wanted for the manufacturing of the blockbuster weight-loss medicine.

“The strike by ILA at East and Gulf coast ports could impact the importation and distribution of medications like Ozempic,” Shamsili mentioned. “The potential effects of the strike include supply chain disruptions, increased shipping costs, inventory shortages of APIs, and production delays.”

Eli Lilly, which makes Mounjaro and Zepbound, has been increasing its manufacturing amenities within the U.S., in addition to in Eire, nevertheless it imports some APIs from Swiss producer Corden Pharma, to provide tirzepatide for the 2 branded medicine. Novo Nordisk imports a few of its APIs for the weight-loss medicine for Ozempic and Wegovy. The API that’s used for each Ozempic and Wegovy is semaglutide.

Ports strike is a threat to medical provides

The chance to medical provides extra broadly is being monitored by the Biden administration and state governments, comparable to New York.

On Monday, leaders on the Division of Well being and Human Companies met with commerce associations, distributors, producers, and different stakeholders to evaluate vulnerabilities and provide chain impacts, the administration mentioned.

“Current preliminary assessments indicate immediate impacts across medicines, medical devices, and infant formula for consumers, parents, and caregivers should be limited,” the administration mentioned in a press release. “The Administration is taking action to monitor and address potential impacts on consumers of labor disputes at East Coast and Gulf Coast ports.”

The Meals and Drug Administration and the Administration for Strategic Preparedness and Response have additionally been in contact with commerce associations, distributors, and producers to restrict impacts on customers and assess vulnerabilities, the administration mentioned.

Shamsili mentioned the East Coast ports are additionally a gateway for generic medication made in India.

Compounding the issue for the health-care business provide chain is the ripple results of Hurricane Helene.

Mirko Woitzik, director of intelligence options at Everstream Analytics, mentioned Baxter Worldwide has a key facility in North Cove, North Carolina, that was broken. That facility makes IV fluids that offer 60% of the U.S. market, together with hospitals. The plant can be the biggest U.S. provider of intravenous and peritoneal dialysis options.

“The U.S. has just overcome a general shortage of IV fluids that lasted since 2014 due to production issues, recalls, and higher demand due to Covid-19,” mentioned Woitzik. “In 2023, the U.S. FDA still listed 55 IV injection bag-related shortages.” 

Gov. Kathy Hochul of New York, which is dwelling to the biggest port within the strike, mentioned in a press release Monday night time that the state is “working around the clock to ensure that our grocery stores and medical facilities have the essential products they need.”

Woitzik mentioned that whereas there are different IV fluids producers, together with ICU Medical, which has a 17% market share, and B. Braun, which has a 23% market share, they’re unlikely to have the ability to make up the provision scarcity within the quick time period. 

“IV fluids are essential medicines used in hospitals for routine and critical care,” Woitzik mentioned. “In the case of a shortage, elective surgeries may be impacted and patients have to stay in hospital longer due to rationing.”

He added {that a} related incident occurred in 2017 when Hurricane Maria devastated a number of pharmaceutical and medical gadget crops in Puerto Rico, resulting in shortages of IV fluids and different patient-critical supplies throughout the U.S. for years. 

The Alliance for Chemical Distribution has mentioned the strike will end in extreme delays, reroutes, and larger uncertainties on the supply of important merchandise at numerous U.S. ports.

Brandon Daniels, CEO of provide chain threat administration advisor Exiger, mentioned the catastrophe reduction companies and the crucial infrastructure suppliers are scrambling to triage crucial and most affected crucial items.

Some drug shipments are labeled “high-value pharmaceuticals” and “low-value pharmaceuticals.” Different shipments determine the APIs used within the U.S. to make weight reduction medicine, in addition to the syringes and disposable needles.

“Although 90% of containerized imports of pharmaceuticals are handled by these ports, we were able to identify that only 23 medicines in the 165 critical medicines are only manufactured through foreign sources,” mentioned Daniels.

“High value medicines will go through air freight,” Daniels mentioned. “We are more concerned about the existing shortages of medicines that we are already tracking and how this disruption hurts the ability to source important APIs and precursors for everything from antibiotics to pain medicines.”

Daniels mentioned consumable merchandise which are essential in catastrophe reduction comparable to sterile gloves and medical plastics are additionally processed by way of these ports.