BEIJING – China’s partial shutdown caused by the 2019-nCoV coronavirus outbreak has sparked global fears of a disrupted supply chain of active pharmaceutical ingredients (API), as the country is a major exporter. Drugs that many depend on, such as ibuprofen and acarbose, could be affected.
The outbreak has forced factories in China to delay re-opening to mid-February or even later, along with travel restrictions imposed in some parts of the country. Global pharmaceutical professionals, ranging from buyers, traders and producers, are now worried that the APIs needed to make critical drugs will not arrive in time.
The gloomy sentiment was captured in a survey by Kemiex, a Swiss-based global trade network. Among 97 pharmaceutical professionals contacted, 85% of them said they expected supply chain disruptions, and 35% of them even warned that impact could be high.
“The biggest impact is expected to come from the extended Chinese New Year holidays and delayed production start, as seasonal maintenance and safety inspections seem to be affected, too,” the organization said.
It warned that orders planned for the first quarter with delivery in the second quarter are expected to be mostly affected, while disruptions might continue for a further quarter.
To minimize domestic travel, holidays were extended to Feb 9 by the local authorities in Shanghai, Zhejiang, Jiangsu, Guangdong, Fujian and Chongqing provinces, and some companies don’t even expect to return to the marketplace before Feb 17, Kemiex noted.
Zhejiang province, in particular, has a cluster of drug manufacturers, such as Hisun Pharmaceutical Co. Ltd., that provides APIs to global pharma companies including Merck & Co. Inc. and Bayer AG.
“We’ve been told that all factories in Zhejiang could remain closed until Feb. 20 because of the lockdown, though no official announcement has been made yet,” Yehuda Sperber, a Jerusalem-based procurement manager who buys from China, told BioWorld. Hisun was not reachable for a comment.
Chinese authorities are ready to extend restrictions on inland transport and travel if the outbreak gets worse. The number of people infected by the novel coronavirus has soared to 31,223 as of Feb 7, with 637 deaths in China and abroad.
Market researcher Fitch Group warned that if the Chinese New Year holidays are further extended, drug manufacturers, mostly formulation plants, especially in India, that use the drug ingredients to make tablets and capsules could also take a hit.
India is a major global generics supplier. The country imports around 84% of the APIs from China.
“Supplies and prices of vitamins and antibiotics, for example, could see a spike, if the scale of the disease and the restrictions increase [in China],” Fitch Group said.
A threat again
China’s dominant role in the global supply chain of APIs may prove to be a major problem for pharma players and patients around the world. U.S. experts had warned that this position could be a threat to national security when U.S.-China trade talks became strained last year; however, the current situation was not foreseen.
The Asian country is the world’s largest supplier of APIs such as penicillin, statins and vitamins, and it is believed to account for around 40% of global production. Its exports of APIs are said to be growing by 13.7% per year.
“There is more awareness of the dependency of the U.S. biopharmaceutical industry on Chinese drug ingredients,” Rob Atkinson, president of the Information Technology and Innovation Foundation, told BioWorld.
According to Fitch Group, China is home to around 13% of the 1,788 facilities that manufacture APIs for drugs marketed in the U.S. The U.S. also relies heavily on imported medicines from the Asian country. Data from the Commerce Department showed that China accounted for 95% of U.S. imports of ibuprofen.
Ibuprofen is one of the many products that Kemiex said could be affected. Diabetes drug acarbose, high blood pressure drug irbesartan, and anti-inflammatory drug ketoprofen are also on the list.
Despite the threat, multinational pharmas remained optimistic that the coronavirus outbreak will not translate into a serious disruption in their drug supplies.
“At this time, we do not anticipate supply chain disruption,” Novartis AG spokesperson Peter Zuest told BioWorld. “We are confident that our existing stock of product is sufficient to cover production/distribution needs for the time being.”
Roche Holding AG also reportedly has one API for global demand coming from China with existing stock reserves and with the possibility of sourcing further supply from another location.
Kemiex also noted that European and other suppliers reported adequate readiness and stocks to ensure delivery to end users during supply interruptions from China, or some of its districts.
Securing supplies at home
While there are concerns over global delivery delays of APIs, China is putting its needs first by ordering production of drugs that it urgently needs to fight the novel coronavirus at home.
This week, Chinese authorities said drug ingredients such as chloroquine phosphate and ribavirin could be used to treat 2019-nCoV. Companies that manufacture those drugs have been ordered to resume production as quickly as possible despite the extended holidays.
“In view of certain curative effects against 2019-nCoV, Chongqing Kangle has been requested by the Ministry of Industry and Information Technology, Consumption Division to promptly resume the manufacturing and production of the active pharmaceutical ingredients chloroquine phosphate,” Tongfang Kontafarma Holdings Ltd. said in a statement on Feb 3. Chongqing Kangle is its subsidiary.
Another manufacturer, Guangxi Hechi Chemical Co Ltd., also said production of the ingredient has been resumed.
Manufacturers of ribavirin, namely Zhejiang Cheng Yi Pharmaceutical Co Ltd. and Shanghai Pharmaceuticals Holding Co Ltd., have also joined the cause.
“We have to mobilize the whole country to secure medical supplies and meet the medical staff’s needs in Hubei province and the city of Wuhan as our priority,” the Chinese government said in a statement on Feb 5, adding that companies are reopening to resume full-scale production to increase supply.