For the moment, Vertex and Seattle Genetics represent the most cautious response, as many other companies carried on plans for the Cowen conference – including Merck & Co. Inc. and Alnylam Pharmaceuticals Inc..
The global outbreak and its disruption of travel and business has had an immediate impact on the economic outlook: $1.7tn was wiped off US stock market values last week, with pharma majors such as Pfizer Inc.and Merck & Co. Inc. as badly affected as any another blue chip company.
Medtech Ups And Downs
Investor fears are at an all-time high over the impact of coronavirus and companies are having to act now on decision-making to protect overall performances in 2020. The outbreak has been likened to the SARS epidemic in 2002-03, but China’s economy is seven times larger now that it was then, making up 16% of global GDP, compared with 4% in 2003.
In the medtech sector, supply chain disruption and a decrease in elective surgeries are having the biggest impact on the industry. Medtech multinationals with manufacturing plants clustered in China are expecting disruption to supply chains due to travel bans and quarantine measures.Boston Scientific Corp. management announced that it expects the outbreak to lead to a $10-40m loss in first-quarter sales with lower procedures volumes and disrupted supply chains in China. Travel limitations are also expected to hinder exports from China to the US and Europe for finishing product assembly.
The virus has caused uncertainty for Smith & Nephew PLC's 2020 outlook. China accounts for 7% of the orthopedics company’s revenues and has been a key growth driver to its business. The company's annual results showed that emerging markets, including China, helped boost revenues in 2019 with sales in the region up 16.6% in the fourth quarter. During its 20 February sales and earnings call, Smith & Nephew executives said the company expects a considerable impact on business in February as a result of a lack of elective surgeries taking place in China.
Philips Healthcareechoed those concerns in its 2019 annual results call, saying overall demand in China had suffered.
And market leader Medtronic PLC has also reported that it will be impacted financially by the reduction in elective surgeries in China related to the outbreak. The country accounts for 7% of the company’s global business, generating about $2.14bn for Medtronic in 2019. China is also the location of Medtronic’s largest manufacturing and research facilities outside of the US.
But it is not all doom and gloom for every medtech company. Manufacturers of syringes and sets for blood collection could be one of the biggest financial winners in the outbreak, so Becton Dickinson & Co. could see a financial boost from the crisis.
The pandemic has also increased demand for respiratory masks and protective gear. The share price for conglomerate 3M Co.has risen since the outbreak as a result of an increase in sales of the company’s face masks. 3M announced it had increased production to meet demand.
Medtech companies in the race to produce a diagnostic test for COVID-19 may also begin first sales this month. French company Novacyt SA announced it has signed its first major agreement with a distributor to supply a COVID-19 test to two Asian territories outside mainland China. Initial sales, which are subject to local emergency-use approval, are anticipated to be £2.1m during the first six months of the agreement. It is anticipated that the first sales under this agreement will take place in March 2020.
Utah-based diagnostics company Co-Diagnostics has also announced a CE mark for its Logix Smart Coronavirus COVID-19 Test to be sold as anin vitrodiagnostic.
Joint reporting from the Informa Pharma Intelligence Team: Scrip, Pink Sheet, Generics Bulletin and Medtech Insight
These selected articles are accessible for In Vivo Subscribers:
US Researchers Working Toward Universal Coronavirus Vaccine - Pink Sheet, Feb 13
Coronavirus: Gilead Readies For Remdesivir Ramp Up, Questions On Profit Motive - Scrip, Mar 3
More German Companies Get To Work On COVID-19 Diagnostic Test Development - Medtech Insight, Mar 3
Sandoz Pledges Price Stability Amid Coronavirus - Generics Bulletin, Feb 27
EU Off-Patent Industry Sees ‘Limited Immediate Risk’ From COVID-19 - Generics Bulletin, Feb 19