Dive Brief:
- Johnson & Johnson doesn't expect the damage caused by Hurricane Maria to its manufacturing facilities in Puerto Rico to have any material impact on future earnings results, noting that it has already begun shipping newly manufactured products from the island.
- J&J, like many of its pharma brethren, has a large presence in Puerto Rico, with six manufacturing plants located there. Power outages and snarled supply chains have hamstrung recovery on the island, although major drugmakers appear to have been able to meet production demands.
- "All of our sites are open with reliable generator power operating in various stages of capacity while the work continues to ramp up to full operations in Puerto Rico," said Dominic Caruso, J&J's chief financial officer, on an Oct. 17 earnings call with analysts.
Dive Insight:
J&J is the first major pharma to report earnings, so the next two weeks will give more clarity into the overall impact felt by the pharmaceutical industry from supply disruptions due to Maria.
In the immediate wake of the hurricane, physical damage to the facilities of drugmakers including Eli Lilly & Co, Amgen Inc. and AbbVie, Inc. appeared to be minor. However, the widespread power outages and intermittent electrical supply in the days and weeks following forced most facilities to switch to back-up generators, threatening to disrupt the flow of medicines shipped.
Major pharma companies such as J&J have redundant capabilities to help mitigate the impact of any one site temporarily constrained.
"While we cannot rule out the potential for intermittent shortages of certain product formats, many of our products have dual production sites and back-up supply outside of Puerto Rico to help meet demand," Caruso said on the call.
J&J's hospital medical device business did experience a 30 basis point hit to unit growth in the third quarter due to lost surgery days from the impact of hurricanes in Texas and Florida as well as Puerto Rico.