An Eli Lilly & Co. Zepbound injection pen, March 28, 2024.
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As a port strike stretching from New England to Texas halted almost half of all commerce coming into the U.S., customs knowledge exhibits that vital medical units and drug elements for the booming, costly weight-loss and diabetes medication 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 medication depend on East Coast ports for incoming commerce.
“Novo Nordisk and Eli Lilly are each closely reliant on the Port of Norfolk,” mentioned William George, director of analysis at ImportGenius, which tracks the customs knowledge.
Up to now 12 months, Novo Nordisk has imported by means of Norfolk 419 twenty-foot equal unit, or TEU, containers value of prescription drugs and injection units that include semaglutide, a compound in its branded weight-loss medication, based on George. “Novo advantageous syringes generally used for insulin injections come into the U.S. by ocean freight as effectively,” 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 e-mail to CNBC that the corporate has mitigation plans in place to attenuate or forestall any manufacturing disruption because of seaport strikes. “We plan to ship our merchandise to and from the U.S. through airfreight,” the spokesperson mentioned.
Vials on the Wegovy line on the Novo Nordisk A/S manufacturing amenities in Hillerod, Denmark, on Friday, March 8, 2024.
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An Eli Lilly spokesperson mentioned the corporate doesn’t focus on the main points of its exterior provider relationships.
Dennis Monts, world chief industrial officer at PayCargo, mentioned air sector volumes strengthened in September, peaking about two weeks in the past.Â
“We’re watching October numbers anticipating a surge of air freight for fast-moving and perishable gadgets akin to produce, seafood, medical provides and different just-in-time inventories,” Monts mentioned.
Noushin Shamsili, CEO and president of Nuco Logistics, which focuses on pharmaceutical imports and exports, advised CNBC on Monday that the strike comes at a vital time for stock replenishment for the drug sector. “Nearly all of this business is simply on time,” mentioned Shamsili. “Uncooked supplies are being introduced in to finish drug manufacturing.”
Roughly 48% of the energetic pharmaceutical components, or APIs, used within the U.S. are imported from India. With out these APIs, drugs 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 vital elements wanted for the manufacturing of the blockbuster weight-loss medication.
“The strike by ILA at East and Gulf coast ports might impression the importation and distribution of medicines like Ozempic,” Shamsili mentioned. “The potential results of the strike embody provide chain disruptions, elevated transport prices, stock shortages of APIs, and manufacturing 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 medication. Novo Nordisk imports a few of its APIs for the weight-loss medication for Ozempic and Wegovy. The API that’s used for each Ozempic and Wegovy is semaglutide.
Ports strike is a danger to medical provides
The danger to medical provides extra broadly is being monitored by the Biden administration and state governments, akin to New York.
On Monday, leaders on the Division of Well being and Human Providers met with commerce associations, distributors, producers, and different stakeholders to evaluate vulnerabilities and provide chain impacts, the administration mentioned.
“Present preliminary assessments point out instant impacts throughout medicines, medical units, and toddler formulation for shoppers, mother and father, and caregivers needs to be restricted,” the administration mentioned in a press release. “The Administration is taking motion to watch and handle potential impacts on shoppers 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 shoppers and assess vulnerabilities, the administration mentioned.
Shamsili mentioned the East Coast ports are additionally a gateway for generic drugs 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 provide 60% of the U.S. market, together with hospitals. The plant can be the most important U.S. provider of intravenous and peritoneal dialysis options.
“The U.S. has simply overcome a common scarcity of IV fluids that lasted since 2014 because of manufacturing points, recollects, and better demand because of Covid-19,” mentioned Woitzik. “In 2023, the U.S. FDA nonetheless listed 55 IV injection bag-related shortages.”Â
Gov. Kathy Hochul of New York, which is house to the most important port within the strike, mentioned in a press release Monday evening that the state is “working across the clock to make sure that our grocery shops and medical amenities have the important merchandise they want.”
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 availability scarcity within the brief time period.Â
“IV fluids are important medicines utilized in hospitals for routine and demanding care,” Woitzik mentioned. “Within the case of a scarcity, elective surgical procedures could also be impacted and sufferers have to remain in hospital longer because of rationing.”
He added {that a} comparable incident occurred in 2017 when Hurricane Maria devastated a number of pharmaceutical and medical system vegetation in Puerto Rico, resulting in shortages of IV fluids and different patient-critical supplies throughout the U.S. for years.Â
The Alliance for Chemical Distribution has mentioned the strike will lead to extreme delays, reroutes, and larger uncertainties on the supply of important merchandise at numerous U.S. ports.
Brandon Daniels, CEO of provide chain danger administration marketing consultant Exiger, mentioned the catastrophe aid companies and the vital infrastructure suppliers are scrambling to triage an important and most affected vital items.
Some drug shipments are labeled “high-value prescription drugs” and “low-value prescription drugs.” Different shipments determine the APIs used within the U.S. to make weight reduction medication, in addition to the syringes and disposable needles.
“Though 90% of containerized imports of prescription drugs are dealt with by these ports, we had been in a position to determine that solely 23 medicines within the 165 vital medicines are solely manufactured by means of international sources,” mentioned Daniels.
“Excessive worth medicines will undergo air freight,” Daniels mentioned. “We’re extra involved concerning the present shortages of medicines that we’re already monitoring and the way this disruption hurts the power to supply vital APIs and precursors for the whole lot from antibiotics to ache medicines.”
Daniels mentioned consumable merchandise which are mandatory in catastrophe aid akin to sterile gloves and medical plastics are additionally processed by means of these ports.