Baxter expects $70M sales hit from hurricane damage; Amgen says costs could top $165M

Hurricane Maria
Drugmakers like Baxter International are tallying up the impact of hurricane Maria, which hit Puerto Rico last month, cutting off power and some drugmakers' ability to get product manufactured or shipped.

Baxter International expects to take a $70 million revenue hit in the fourth quarter after Hurricane Maria left its three plants on the island without reliable power, communications or transportation, while Amgen said its costs could top $165 million.

Amgen and Baxter are the latest to offer a damage assessments as the industry continues to tally the impact from last month's natural disaster that swept through Puerto Rico, home to more than 40 drug manufacturing facilities.

RELATED: Shortages of drugs and saline reported as Puerto Rico hurricane damage lingers

Amgen reported late Wednesday that its manufacturing and packaging plants in Juncos are fully operational and that its expects to resume formulation/filling and small molecule commercial production by the end of October. But it reported $67 million of pre-tax expenses tied to the hurricane in Q3 and said that hurricane related costs could run $75 million to $100 million in Q4. 

The California-based drugmaker said that the estimates do not include possible insurance recoveries and that at this point, it does not expect the hurricane expenses to have "a significant impact to full-year 2018 results."  

Baxter in its earnings report Wednesday said that its three plants in Puerto Rico remain in “limited production,” but that the FDA is allowing it to temporarily import some products from its facilities in Ireland, Australia, Canada and Mexico to help feed demand in the U.S. market. It earlier said that it had moved supplies of some products off the island before the storms hit.  

“While these actions will help mitigate some of the projected shortfall in supply, they will not be adequate to fully bridge the gap in the fourth quarter,” the company explained.

Despite the setbacks in Puerto Rico, Baxter reported earnings that beat analyst expectations, with $2.7 billion in third-quarter revenue, up 6%. It said—even with the fourth-quarter hit—it expects sales growth this year of 4% and adjusted EPS of $2.40 a share to $2.43 a share.

RELATED: Johnson & Johnson says Puerto Rico plants 'fared well' in Maria but 'intermittent' shortages possible

During last week's earnings report, Johnson & Johnson said its Janssen operations in six Puerto Rican plants were relatively unscathed by the natural disaster. While it might have to deal with some "intermittent" drug shortages, it said it expected no significant dent in its finances.

One of Janssen’s partners, Newark, California-based Depomed said recently that patients could expect disruptions in the supplies of pain drug Nucynta ER. Another of its drugs, Gralise, is also produced in Puerto Rico by CDMO Patheon, but the company said it believed it had adequate inventory to avoid a disruption in supplies.

Drugmakers including Pfizer, Merck & Co., Eli Lilly, Bristol-Myers Squibb and Amgen produce about 10% of all U.S. drugs in Puerto Rico—so more shortages are sure to materialize.