The coronavirus-stoked demand for protective gear like facemasks ideally would be a boon for Medline Industries. But with so many products manufactured in China, the Northfield, Ill.-based medical products company could have trouble getting personal protective equipment.
"As numerous efforts are being undertaken within China to prevent further spread of the novel coronavirus, we are seeing some impact on manufacturing operations," the manufacturer and distributor said in an emailed statement.
The virus continues to spread in the U.S., with a 15th case confirmed Wednesday, and in countries such as Japan, which is closing schools for a month to contain the virus. The Centers for Disease Control & Prevention recommends health care workers and patients with confirmed or suspected cases of coronavirus wear facemasks to prevent the respiratory illness from spreading.
However, Medline said restrictions on exporting facemasks and other equipment "potentially could lead to a reduction in capacity or delayed shipments for these items throughout the industry." Additionally, the company said China's Hubei province, where many medical supplies are manufactured, has extended a mandatory business shutdown through March 10.
With more than 20,000 employees worldwide, Medline reported $11.7 billion in 2018 revenue, according to its website. It's not the only company that relies on Chinese manufacturers for medical supplies and other products.
For example, Apple recently said its supply of iPhones would be temporarily constrained because of the coronavirus, adding that demand for its products within China is also down.
It's always more concerning when supply and demand aren't moving in the same direction, which is the case with personal protective equipment, said Sunil Chopra, IBM professor of operations management at Northwestern University's Kellogg School of Management.
"The demand for facemasks is going up, for obvious reasons," Chopra said. "On the other hand, given that many are made in China where factories might be down because of the coronavirus, the impact on the supply chain here is much more significant. . . .When demand is rising but supply is dropping, it really hurts."
Other medical supplies made in China, including wound care products and surgical gowns, "likely will be impacted by the events in China if the restrictions continue for an extended time," Medline said.
A surgical gown shortage is even more problematic considering Cardinal Health earlier this year voluntarily recalled more than 2.5 million packs containing surgical gowns that may have been exposed to bacteria and other contaminants, Modern Healthcare reports.
As a result of the recall, Medline in January said it was "ramping up" capacity of its level 3 surgical gowns based on the anticipated impact to health care providers.
"Our top priority is to ensure current Medline customers have the essential supplies they need to protect both patients and staff," the company said this week. "We have put in place inventory management programs to protect as much inventory as possible for our customers. In addition, we are actively working on options to increase production in other areas of our global supply chain, while diligently monitoring the situation in China."
This story first ran in our sister publication, Crain's Chicago Business.
