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

COVID-19's global spread has raised fears over drug shortages and price spikes, but Novartis' Sandoz is taking an early step to allay those concerns. The drugmaker, a top player in generics and off-patent antibiotics, pledged “stable” pricing for certain essential drugs and antibiotics amid the crisis. 

No matter how the supply chain situation plays out, Sandoz pledged to “keep prices stable for certain essential medicines it markets commercially," CEO Richard Saynor said in a statement. Some of those medicines may help treat cases of the novel coronavirus, he added.

The commitment comes amid fears that the global supply chain will face disruption from an outbreak that’s so far taken its biggest toll in China, a manufacturing powerhouse where many of the pharmaceutical industry's starting materials are made.

While it might be logical to look at past outbreaks to see how they affected supply, Saynor wrote that there hasn't ever been a situation like this one. In recent years, China has grown to be the “center of a global supply chain system,” he said in a LinkedIn post. Prior emergencies won't provide guidance about how the current outbreak will play out. Even Coca-Cola reported (PDF) that it may face shortages of sweetener that's made in China.

In the short term, pharma companies and others are doing what they can to ensure supply. In the long run, Saynor sees a need to address “the complex and interconnected issues of pricing, supply and quality." He supports an effort by Germany to bring more pharmaceutical production back to Europe. 

For now, though, the generics industry “has a particular responsibility … to ensure that patients can get the medicines they need.” Already, reports in India have said prices have started to spike as active pharmaceutical ingredient supplies out of China have diminished.  

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After speaking with execs from Mylan and Teva, Bernstein analyst Ronny Gal wrote this week that there aren’t any coronavirus-related drug shortages yet but that companies are “worried." The supply chain has six to nine months of supply, but if the situation doesn’t improve, shortages could start popping up in the second and third quarters of 2020, he wrote. Prices of some starting materials are already jumping by 10% to 50%.

The FDA is interacting with companies on a daily basis to stay ahead of potential shortages, the execs told Gal.