Effect of Coronavirus on U.S. biopharma companies
The outbreak of coronavirus is no doubt is a major threat to people’s health. But for U.S. biopharma companies, their business may be impacted in both sense positively as well as negatively.
As if the virus persists long enough, the branded drugmakers are expected to see decreased demand for innovative drugs in China. But on other hand, the global spread of the virus could also lead to government stockpiling of certain drugs such as antivirals.
Further, the supply chain is also disrupted due to outbreak as for generic players who depend on China for Active Pharmaceutical Ingredients. Which may be profitable for players whose source of API is from other countries, as they can increases the drug prices.
Many generic players source for APIs is in China which have put this companies in the vulnerable situation, as most API producers are located in provinces of Shandong, Jiangsu and Zejiang along the east coast of China.
However, there are many tangible threat from coronavirus for innovative drug developers. As many companies are manufacturing plants in China, though mostly for the local market. For instance, Merck & Co. has its facility in Hangzhou which supplies drugs to China and other Asian countries. Further, AstraZeneca has two manufacturing facilities in Wuxi and Taizhou for manufacturing drugs for European market.
The companies which are focusing on new meds are unlikely to encounter material global supply disruption as they don’t have a heavy manufacturing presence in China. The impact on China sales are twofold. As firstly several drug makers extended the Lunar New Year holiday for their local offices following notices from the Chinese government. Even when they return to work the sales representatives were not advised to call customers in person to avoid exposure.
Further, the patients are also not actively seeking care or renewing prescription out of fear of contagion for less urgent diseases along with silent but potentially life-threatening illnesses such as cardiovascular diseases.
In India also the generic drugmakers Cipla, Umang, Vohra stated that supplies would start running out by the end of February unless China resumes their production. Similar problem could also apply to U.S. as the China is a major producer of APIs of antibiotics and vitamins.
The companies like Gilead Sciences, AbbVie and Johnson & Johnson are collaborating with health authorities to develop antiviral medications to treat or vaccines to prevent coronavirus.