East Coast Port Strike Causes Delays in Weight-Loss Drug Supply to Wegovy, Ozempic, Mounjaro, and Zepbound

• The importation of critical medical devices and drug components for the popular new weight-loss drugs from Novo Nordisk and Eli Lilly, Ozempic, Wegovy, and Mounjro, into ports where ILA union strikes have occurred is shown in customs data.
• The Port of Norfolk, Virginia, is a crucial East Coast port where ILA union longshoremen went on strike on Tuesday, and it is vital to both companies' drug supply.
• Novo Nordisk says it is redirecting trade to air freight.

The port strike from New England to Texas has resulted in a halt of nearly half of all trade entering the U.S., according to customs data. Among the casualties of the ILA union port work stoppage are critical medical devices and drug components for weight-loss and diabetes drugs from Novo Nordisk and Eli Lilly, including Ozempic, Wegovy, Mounjaro, and Zepbound.

The incoming trade of insulin and weight-loss drugs relies on East Coast ports, as evidenced by bills of lading, the digital receipts of freight containers.

According to William George, director of Research at ImportGenius, both Novo Nordisk and Eli Lilly are heavily dependent on the Port of Norfolk.

In the past year, Norfolk has imported 419 TEU containers of pharmaceuticals, including filled-injection devices containing semaglutide, according to George. Additionally, Novo fine syringes, commonly used for insulin injections, are also imported into the U.S. via ocean freight.

Nearly $50 billion in sales from Wegovy and Ozempic have been generated by Novo Nordisk, with the majority of that revenue stemming from the U.S., as stated by the company's CEO in a recent Senate testimony.

A Novo Nordisk representative informed CNBC via email that the company has contingency plans in place to minimize any production disruptions resulting from potential seaport strikes. The representative stated that the company will ship its products to and from the U.S. using airfreight.

A spokesperson stated that they do not disclose information about their relationships with external suppliers.

PayCargo's global chief commercial officer, Dennis Monts, stated that air sector volumes were strong in September, reaching their peak about two weeks ago. He anticipates a surge in air freight for fast-moving and perishable items such as produce, seafood, medical supplies, and other just-in-time inventories in October.

Some pharmaceuticals are labeled as "high-value" and "low-value."

The U.S. weight loss drugs contain APIs, syringes, and disposable needles, which are identified by other shipments.

The CEO of Nuco Logistics, which specializes in pharmaceutical imports and exports, stated on Monday that the strike is occurring at a crucial moment for inventory replenishment in the drug sector. According to Shamsili, "Almost all of this industry is just on time," and raw materials are being brought in to complete drug manufacturing.

In the U.S., approximately 48% of active pharmaceutical ingredients (APIs) are imported from India. These APIs are crucial for the production of medications, and they are also manufactured in Europe. Additionally, East Coast ports are used as entry points for APIs imported from Europe.

The manufacturing of blockbuster weight-loss drugs relies on some of these APIs.

"The strike by ILA at East and Gulf Coast ports could affect the importation and distribution of medications like Ozempic, according to Shamsili. The potential consequences of the strike include supply chain disruptions, increased shipping costs, inventory shortages of APIs, and production delays."

Eli Lilly, which produces Mounjaro and Zepbound, has been expanding its production facilities in the U.S. and Ireland, but imports some APIs from Swiss manufacturer Corden Pharma to produce tirzepatide for the branded drug. Novo Nordisk imports some of its APIs for weight-loss drugs Ozempic and Wegovy, which use semaglutide.

East and Gulf Coast ports strike risk to medical supplies

The Biden administration and state governments, including New York, are closely monitoring the risk to medical supplies.

On Monday, the Department of Health and Human Services leadership met with various stakeholders, including trade associations, distributors, manufacturers, to evaluate vulnerabilities and assess supply chain effects.

"The administration has stated that preliminary assessments suggest that immediate effects on medicines, medical devices, and infant formula for consumers, parents, and caregivers should be limited due to labor disputes at East Coast and Gulf Coast ports. The administration is taking action to monitor and address these potential impacts on consumers."

The HHS, FDA, and ASPR have communicated with trade associations, distributors, and manufacturers to minimize consumer effects and evaluate potential risks.

Generic medicine made in India is also accessible through the East Coast ports, as stated by Shamsili.

The ripple effects of Hurricane Helene are compounding the problem for the health-care industry supply chain.

Everstream Analytics' director of intelligence solutions, Mirko Woitzik, stated that Baxter International's key facility in North Cove, North Carolina, which produces 60% of the U.S. market's IV fluids and is the largest U.S. supplier of intravenous and peritoneal dialysis solutions, was damaged.

"Since 2014, the U.S. has faced a persistent shortage of IV fluids due to production problems, recalls, and increased demand due to Covid-19. In 2023, the FDA reported 55 IV injection bag-related shortages."

New York Governor Kathy Hochul stated on Monday night that the state is actively working to ensure that grocery stores and medical facilities have access to the necessary products during the strike.

While other IV fluids manufacturers such as (17% market share) and B. Braun (23% market share) are unlikely to be able to make up the supply shortage in the short term, Woitzik said.

"IV fluids are crucial medications used in hospitals for both routine and critical care, according to Woitzik. If there is a shortage, elective surgeries may be affected, and patients may need to remain in the hospital for longer periods due to rationing."

In 2017, Hurricane Maria caused damage to pharmaceutical and medical device plants in Puerto Rico, resulting in shortages of IV fluids and other critical patient materials in the U.S. for several years.

The strike will cause significant delays, reroutes, and uncertainties in the delivery of crucial products at numerous U.S. ports, according to the Alliance for Chemical Distribution (ACD).

Brandon Daniels, CEO of supply chain risk management consultant Exiger, stated that disaster relief agencies and critical infrastructure providers are frantically trying to prioritize the most critical and affected goods. Despite the fact that 90% of containerized imports of pharmaceuticals are handled by these ports, only 23 out of the 165 critical medicines are manufactured through foreign sources, according to Daniels. He emphasized that high-value medicines will be transported via air freight. However, the existing shortages of medicines that are already being tracked are a major concern, as this disruption may hinder the ability to source important APIs and precursors for a wide range of drugs, including antibiotics and painkillers.

Medical supplies like sterile gloves and medical plastics are also processed through the same ports used for disaster relief.