Dive Brief:
- Hurricane Fiona is not expected to materially impact medical device manufacturing and supply at leading companies with operations in Puerto Rico, according to analysts at J.P. Morgan.
- The hurricane made landfall on Sunday, leading to ongoing warnings of heavy rainfall and life-threatening flash floods and leaving 90% of the island without power. The events were reminiscent of Hurricane Maria, which caused an estimated 2,975 deaths in Puerto Rico in 2017.
- However, while the 2017 hurricane disrupted medtech supply chains, device makers expect fewer problems this time around, noting that Fiona is less severe and that they are better prepared, J.P. Morgan analysts wrote.
Dive Insight:
Puerto Rico has emerged as a hub for medtech manufacturers. Today, companies including Baxter, Edwards Lifesciences, Medtronic and Stryker have facilities on the island, according to the report.
Given the impact of Hurricane Maria, which was still hurting Baxter’s financials more than one year after it hit the island, analysts at J.P. Morgan responded to the latest natural disaster by contacting medtech management teams. The analysts emerged from the talks reassured about the likely impact on medtech.
“While Hurricane Fiona has been devastating for Puerto Rico, leaving many without electricity and clean water, we don’t expect any material impacts to manufacturing/supply across our coverage universe,” the analysts wrote in a note to investors. “Overall, none of the companies has reported any significant damage to facilities, with operational sites currently running on generator power.”
The analysts found the companies were better prepared with backup generators and fortified building structures than in 2017. Baxter suffered minor damage at some sites, according to the analysts, leading it to keep some facilities closed on Monday. Undamaged facilities were running on generator power with enough fuel for “extended operations,” although Baxter expects to return to business as usual in days.
Most companies have greater redundancy than in 2017, the analysts found, with Stryker only producing endoscopy devices and instruments on the island while Edwards’ operations are primarily focused on its critical care portfolio.
Medtronic canceled a few manufacturing shifts but was preparing to resume work later on Monday.
