From food to electronics to medical supplies, the coronavirus outbreak has forced us to think about where goods come from — in other words, the global supply chain. Factory shutdowns in China have rippled throughout the world.
"We've had some pretty dramatic impacts. On average, manufacturing is operating at about 50% production capacity right now and labor staffing rates are about 56% of normal," said Tom Derry, CEO, Institute for Supply Management.
One sector that has experts especially worried is the health care industry, which has grown dependent on imports for life-saving drugs.
"So, the health care supply chain in particular is a little more vulnerable to disruption than I think some other supply chains because there tend to be many single sources of product," Derry said.
Chinese drug imports into the United States have exploded over the years. Today, many common drugs come largely from China — including 95% of ibuprofen imports and 36% of antibiotic imports.
"We have virtually no manufacturing capability left in the United States to make generic antibiotics. These are the medicines that you give to your kids for ear infections, strep throat and we're talking about also superbug treatment and last resort antibiotics," Rosemary Gibson, senior advisor, The Hastings Center, said.
But the FDA warns our dependence is actually much higher, because China also supplies the active ingredients for other drug makers for other major exporters.
"Even India is dependent on China for 80% of the key ingredients it needs for its generic industry. And when you control the supply of medicines, you control the world," Gibson said.
India has decided to restrict exports for 26 critical drugs — including acetaminophen, which coronavirus patients take for fever. 98% of the drug’s imports by the United States are from China and India.
"Having manufacturing globalized is not necessarily a bad thing, but having it consolidated in specific locations can obviously increase the risk," Michael Ganio, director, Pharmacy Practice & Quality, American Society of Health-Systems Pharmacists, said.
According to the most recent FDA data, from February, only one manufacturer in China had reported a shortage.
"We may find that we are relying on the inventory that we currently have. And not a whole lot more is coming. Which means we need to make the best of what we have. We need to make sure we allocate it to the most critical applications that could save lives," Bindiya Vakil, CEO, Resilinc said.
And while some Chinese factories may be coming back online, coronavirus could rebound as quarantines are relaxed.
"Remember, we have not defeated that disease in China, which means the moment people start coming out of their homes, interacting, going back to factories and shops and all of that, we're going to see cases again," Vakil said.
