Manufacturers weigh impact of coronavirus

ResMed, Inogen, Philips and F&P have all made comments
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Friday, March 6, 2020

YARMOUTH, Maine – It’s too early to say how much the coronavirus outbreak is affecting their supply chains, HME manufacturers say, but there could be other trickle-down effects.

Manufacturers like ResMed, Inogen, Philips and Fisher & Paykel Healthcare have all said they’re monitoring the virus closely.

“There’s a pretty dynamic situation going on in China,” said Rob Douglas, president and COO of ResMed during a recent conference call to discuss the company’s most recent financial results. “So tracking is difficult, but we are tracking it very closely.”

At least for now, manufacturers say the crisis hasn’t significantly impacted their supply chains, with ResMed’s Douglas noting the company’s “supply chain isn’t configured around China.”

“Most of it is not in China, but there are some second and third-tier suppliers that work closely with them at the moment,” he said. “We wouldn’t expect this to be a problem, but we’ll have to keep a close eye on them.”

Fisher & Paykel doesn’t have a manufacturing facility in China, but the company does buy raw materials from suppliers in the country.

“At this stage, we do not anticipate any significant impact on supply to our existing customers,” said Lewis Gradon, managing director and CEO, in an update posted to the company’s website. “We will continue to assess this on an ongoing basis, particularly if the outbreak escalates or continues for a prolonged period.”

Inogen also addressed the virus during its recent conference call to discuss its latest financial results, with President and CEO Scott Wilkinson saying, “We continue to monitor our Chinese supply chain, but we do not expect this to have a material impact on our business at this time.”

In a recent annual report for 2019, Philips says the virus is impacting its global supply chain, but it’s unclear how much.

“While this is expected to have a negative impact on the financial performance of Philips in the first quarter of 2020, the company cannot quantify the magnitude and duration of such impact at this time given the fluidity of the situation,” it stated.

There could also be other trickle-down effects to HME manufacturers from the virus outbreak, including an increasing demand for their products.

“In terms of our China business, we think, obviously, the hospitals are going to be very busy (with respiratory patients),” Douglas said. “We would expect to see increased demand for ventilators. We’re actually working hard on our local supply chain there.”

F&P noted that it has seen “better-than-expected sales” in its homecare product group, including an increase in demand from China related to the virus.

But there could be an offset to that increased business, too, Douglas said.

“Likely the hospitals won’t be looking at sleep patients for awhile,” he said. “But it’s unlikely all of that to be material.”