Cardinal tips API supply chain to weather impact of coronavirus

Last month, a survey of 97 life sciences professionals by online trading platform Kemiex found more than one third of people expect the viral outbreak in China to have a significant impact on the supply chain​. A further 50% of respondents predicted the outbreak will have a smaller impact, leaving just a tiny minority of people who do not expect any disruption.

Cardinal Health’s role in the drug supply chain means it is better placed than many organizations to say whether the more optimistic or pessimistic readings of the situation are more likely to come to pass.

The topic came up on a recent quarterly results conference call with investors. On the call, Mike Kaufmann, CEO of Cardinal, acknowledged the risk of disruption to supplies of active pharmaceutical ingredients (APIs) while also expressing confidence in the potential for mitigating actions to reduce that threat.

Kaufmann said, “We’ve worked with manufacturers to try to increase supplies ahead of this. I do think it’s something that, based on the amount of supply and the supply chain, ... the industry should be able to work through. But it’s hard to say how long this will last, and it’s something that we’re going to have to keep an eye on​.”

One challenge for Kaufmann when making predictions is Cardinal lacks insights into the situations of its competitors. As such, Kaufmann is not in a position to say whether the supply of APIs will be severely disrupted if, for example, the current situation in China drags on for eight weeks.

Faced with the uncertainty, Cardinal can only work to ensure the products it manages continue to get made and shipped. Cardinal’s work toward that goal has entailed a product-by-product analysis of the potential for supply chain disruption and how shortages would affect healthcare systems.

Based on that analysis, Cardinal has identified products that are both important and vulnerable, with work underway to ramp up manufacturing of those products to make stocks available in the event of a disruption to the supply chain.

Cardinal was one of several companies to comment on the effect of the outbreak on drug supply chains on recent quarterly results conference calls. Novo Nordisk, for example, said it is “business as usual​” for its Chinese supply chain, although it acknowledged that could change.

Gilead Sciences has a different challenge. As a manufacturer of an antiviral that may treat the virus, the company has been “working night and day​” to scale up its capacity to meet demand for the drug.