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 near half of all commerce coming into the U.S., customs knowledge exhibits that important medical gadgets and drug parts 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.
Novo Nordisk has imported 419 twenty-foot equal (TEU) containers value of prescription drugs by way of Norfolk prior to now yr, in response to George, and filled-injection gadgets containing semaglutide, a compound within the branded weight-loss medication. “Novo positive syringes generally used for insulin injections come into the U.S. by ocean freight as properly,” he mentioned.
Novo Nordisk has raked in practically $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 said in an e mail to CNBC that the corporate has mitigation plans in place to attenuate or forestall any manufacturing disruption because of the potential 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 it doesn’t talk about the small print of its exterior provider relationships.
Dennis Monts, international chief industrial officer at PayCargo, mentioned air sector volumes had been strengthened within the month of September, peaking about two weeks in the past. “We’re watching October numbers anticipating a surge of air freight for fast-moving and perishable gadgets equivalent to produce, seafood, medical provides and different just-in-time inventories,” mentioned Monts.
Some drug shipments are labeled “high-value prescription drugs” and “low-value prescription drugs.”
Different shipments determine the energetic pharmaceutical substances (APIs) used within the U.S. to make weight reduction medication, in addition to the syringes and disposable needles.
Noushin Shamsili CEO & President of Nuco Logistics, which focuses on pharmaceutical imports and exports, advised CNBC on Monday that the strike comes at a important time for stock replenishment for the drug sector. “Nearly all of this trade is simply on time,” mentioned Shamsili. “Uncooked supplies are being introduced in to finish drug manufacturing.”
Roughly 48% of the energetic pharmaceutical substances (APIs) used within the U.S. are being imported from India. With out these APIs, medicines can’t be produced. APIs are additionally manufactured in Europe which additionally use the East Coast ports as U.S. factors of entry.
A few of these APIs are important parts wanted for the manufacturing of the blockbuster weight-loss medication.
“The strike by ILA at East and Gulf Coast ports might influence the importation and distribution of medicines like Ozempic,” Shamsili mentioned. “The potential results of the strike embrace provide chain disruptions, elevated delivery 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, however imports some APIs from Swiss producer Corden Pharma, to provide tirzepatide for the branded drug to be manufactured. 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.
East and Gulf Coast ports strike threat to medical provides
The chance to medical provides extra broadly is being monitored by the Biden administration and state governments, equivalent to New York.
On Monday, Biden administration management 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.
“Present preliminary assessments point out instant impacts throughout medicines, medical gadgets, and toddler method for customers, mother and father, and caregivers needs to be restricted,” the administration mentioned in an announcement. “The Administration is taking motion to observe and tackle potential impacts on customers of labor disputes at East Coast and Gulf Coast ports.”
Along with the HHS, the Meals and Drug Administration, and Administration for Strategic Preparedness and Response (ASPR) have been in contact with commerce associations, distributors, and producers to restrict impacts on customers and assess vulnerabilities.
Shamsili mentioned the East Coast ports are additionally a gateway for generic drugs made in India.
Compounding the issue for the health-care trade provide chain is the ripple results of Hurricane Helene.
Mirko Woitzik, director of intelligence options at Everstream Analytics, mentioned that 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 also be the biggest 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 resulting from manufacturing points, recollects, and better demand resulting from Covid-19,” mentioned Woitzik. “In 2023, the U.S. FDA nonetheless listed 55 IV injection bag-related shortages.”
Governor Kathy Hochul of New York, which is house to the biggest port within the strike, mentioned in an announcement on Monday night time 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 whereas different IV fluids producers embrace ICU Medical (17% market share) and B. Braun (23% market share), they’re unlikely to have the ability to make up the provision scarcity within the quick time period.
“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 resulting from rationing.”
He added {that a} related incident in 2017 occurred when Hurricane Maria devastated a number of pharmaceutical and medical system vegetation in Puerto Rico, resulting in shortages of IV fluids and different affected person important supplies throughout the U.S. for years.
The Alliance for Chemical Distribution (ACD) has mentioned the strike will end in extreme delays, reroutes, and higher uncertainties on the supply of important merchandise at numerous U.S. ports.
Brandon Daniels, CEO of provide chain threat administration guide Exiger, mentioned the catastrophe reduction businesses and the important infrastructure suppliers are scrambling to triage a very powerful and impacted important items. “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 important medicines are solely manufactured by way of overseas sources,” mentioned Daniels. “Excessive worth medicines will undergo air freight. We’re extra involved in regards to the present shortages of medicines that we’re already monitoring and the way this disruption hurts the flexibility to supply necessary APIs and precursors for every little thing from antibiotics to ache medicines.”
Daniels additionally warned consumable merchandise which can be crucial in catastrophe reduction equivalent to sterile gloves and medical plastics are additionally processed by way of these ports.
