Drugmakers tell analyst ingredient prices are rising as FDA reports first supply hit tied to COVID-19

Prices for APIs and other ingredients are starting to rise, drugmakers report, as the COVID-19 outbreak continues to spread. (Image by Gerd Altmann from Pixabay)

The world’s heavy reliance on cheap Chinese ingredients has shown a fault line in the U.S., as the FDA reports the first shortage of a drug due to the COVID-19 outbreak. With 20 other FDA-approved drugs relying solely on China as the source of an API or finished product, more shortages may soon materialize.

Without identifying the drug or the manufacturer, the FDA today reported it has been alerted to a shortage by a manufacturer “related to a site affected by coronavirus.” It said there were alternatives to the drug.

RELATED: FDA anticipates disruptions, shortages as China outbreak plays out

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The FDA says it has determined there are 20 products for which the ingredients, or the finished product, are sourced entirely from China, but makers say so far there has been no interruption in their supply. The FDA said these drugs also are “considered non-critical drugs.” 

Bernstein analyst Ronny Gal in a note said his team also has been taking the temperature of the industry about supply chains. In discussions with four industry execs, they were told that no shortages have yet materialized, but if the situation continues “spot shortages” will pop up late in the second or third quarter. Bernstein says they were told the industry has six to nine months of supplies split among suppliers, generics makers and distributors.

RELATED: Sandoz pledges 'stable' pricing for generics, antibiotics amid COVID-19 supply chain worries

Prices of “key starting materials," however, are starting to rise, up 10% to 50% depending on who is asked, and generics producers are beginning to look to their clients to absorb those increases, Bernstein reported. He said Indian generics producers are “better backward integrated than the US players" and they will withstand shortages better. 

One key player in generics and off-patent antibiotics is holding the line on some prices. Novartis’ Sandoz unit yesterday pledged “stable” pricing for certain essential drugs and antibiotics amid the crisis. Antibiotics are particularly vulnerable to price raises since China dominates ingredients in that area. 

Meanwhile, the virus continues to spread globally. The World Health Organization says cases were reported in “nine new member states” with the global case count now at 82,104, with 2,801 deaths reported.

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