Blockbuster weight-loss drug supply hit in trade shutdown

Strikes at ports from New England to Texas have disrupted nearly half of U.S. trade, customs data showing, affecting key medical devices and pharmaceutical ingredients for Novo Nordisk and Eli Lilly's booming pipeline of expensive weight-loss and diabetes drugs. Wegovy, Mounjaro and Zepbound are all trade casualties of the ILA joint port shutdown.

Bills of lading (digital receipts for shipping containers) show the delivery mechanism for insulin and weight-loss drugs relies on East Coast ports for import trade.

“Both Novo Nordisk and Eli Lilly rely heavily on the Port of Norfolk,” said William George, research director at ImportGenius, which tracks customs data.

In the past year, Novo Nordisk According to George, the company has imported container-loads of pharmaceuticals and injectable devices containing semaglutide, a compound in its branded weight-loss drug, via Norfolk 419 20-foot equivalent units (TEU). “Novo precision syringes, which are commonly used for insulin injections, also come into the United States by sea,” he said.

Novo Nordisk's chief executive recently testified before the U.S. Senate that the company has generated nearly $50 billion in sales from Wegovy and Ozempic, with most of the revenue coming from the United States.

A Novo Nordisk spokesperson said in an email to CNBC that the company has mitigation plans in place to minimize or prevent any production disruptions caused by the seaport strike. “We plan to ship our products to and from the United States via air freight,” the spokesperson said.

one Eli Lilly and Company The company does not discuss the details of its external supplier relationships, a spokesman said.

Dennis Monts, PayCargo's global chief commercial officer, said cargo volumes in the airline industry strengthened in September, peaking about two weeks ago.

“We are watching the October data and expect a surge in air freight volumes for fast-moving and perishable items such as produce, seafood, medical supplies and other just-in-time inventory,” Muntz said.

Noushin Shamsili, CEO and president of Nuco Logistics, which specializes in the import and export of pharmaceuticals, told CNBC on Monday that the strike comes at a critical time for the pharmaceutical industry to replenish inventories. “Almost everything in this industry is on time,” Shamsiri said. “Raw materials are being brought in to complete drug production.”

About 48% of active pharmaceutical ingredients (APIs) used in the United States are imported from India. Without these APIs, drugs cannot be produced. API is also manufactured in Europe, and the U.S. entry point for these products is the East Coast Port.

Some of these APIs are key ingredients needed to produce blockbuster weight-loss drugs.

“ILA's strike at Eastern and Gulf Coast ports could impact the import and distribution of drugs like Ozempic,” Shamsili said. “Potential impacts of the strike include supply chain disruptions, increased transportation costs, API inventory shortages, and production delays.”

Eli Lilly, which makes Mounjaro and Zepbound, has been expanding its manufacturing facilities in the United States and Ireland, but it imports some of the API from Swiss manufacturer Corden Pharma to make tezepatide for both brands of the drug. Novo Nordisk imports some APIs used in its Ozempic and Wegovy weight loss drugs. The API used for Ozempic and Wegovy is semaglutide.

Port strike threatens medical supplies

The Biden administration and state governments like New York are monitoring the risks of medical supplies more broadly.

Health and Human Services leaders met with industry associations, distributors, manufacturers and other stakeholders on Monday to assess vulnerabilities and supply chain impacts, the government said.

“The current preliminary assessment indicates that the direct impact of drugs, medical devices, and infant formula on consumers, parents, and caregivers should be limited,” the U.S. government said in a statement. “The government is taking action to monitor and address Potential Consumer Impact of Labor Disputes at East Coast and Gulf Coast Ports.”

The FDA and Strategic Preparedness and Response Administration are also in contact with industry associations, distributors and manufacturers to limit the impact on consumers and assess vulnerabilities.

East coast ports are also gateways for generic drugs made in India, Shamsiri said.

The ripple effects of Hurricane Helene have compounded issues in the healthcare industry supply chain.

Milko Woitzik, director of intelligence solutions at Everstream Analytics, said a critical Baxter International facility in North Bay, North Carolina, was damaged. The plant produces intravenous fluids that supply 60% of the U.S. market, including hospitals. The plant is also the largest supplier of intravenous and peritoneal dialysis solutions in the United States.

“The U.S. has just overcome widespread shortages of intravenous fluids that have persisted since 2014 due to production issues, recalls and increased demand due to Covid-19,” Woitzik said. “In 2023, the U.S. FDA still lists 55 intravenous fluid shortages related to intravenous fluids. Injection bag-related shortages.”

Governor Kathy Hochul of New York, home to the largest port in the strike, said in a statement late Monday that the state “is working around the clock to ensure our grocery stores and medical facilities have the essential products they need.” .

Woitzik said that while there are other IV infusion manufacturers, including intensive care unit medicalB. Braun, which has a market share of 17%, and B. Braun, which has a market share of 23%, are unlikely to make up for the supply shortage in the short term.

“Intravenous fluids are essential medications used in hospitals for both routine and critical care,” Wojcik said. “In the event of a shortage, elective surgeries may be affected and patients have to stay in hospital longer due to rationing.”

He added that a similar incident occurred in 2017, when Hurricane Maria destroyed several pharmaceutical and medical device factories in Puerto Rico, leading to years of shortages of intravenous fluids and other patient-critical materials across the United States.

The Chemical Distribution Alliance said the strike would lead to significant delays, diversions and greater uncertainty in the delivery of essential products at countless U.S. ports.

Brandon Daniels, chief executive of supply chain risk management consultancy Exiger, said disaster relief agencies and critical infrastructure providers are scrambling to catalog the most important and hardest-hit critical cargo.

Some drug shipments are labeled “high-value drugs” and “low-value drugs.” Other shipments include APIs used in the U.S. to make weight-loss drugs, as well as syringes and disposable needles.

“While 90 percent of containerized pharmaceutical imports are handled by these ports, we found that only 23 of the 165 critical pharmaceuticals were produced through foreign sources,” Daniels said.

“High-value medicines will be shipped by air,” Daniels said. “We are more concerned about shortages of existing medicines that we are already tracking, and how this disruption is compromising the ability to procure vital APIs and precursors for everything from antibiotics to painkillers.”

Consumables needed for disaster relief, such as sterile gloves and medical plastics, are also processed through these ports, Daniels said.