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Lilly Expects No Drug Supply Shortages Due to Coronavirus

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Eli Lilly & Company LLY announced that it does not expect a shortage in supply of its medicines, including all forms of insulin, due to the novel coronavirus.

There has been rising concern over whether pharma companies can maintain an adequate supply of medicines considering that many of them source their active pharmaceutical ingredients (APIs) from China. APIs are the chemicals or biological, which are used in the composition and the production of any drug. With the deadly coronavirus outbreak ravaging China, there have been operational disruptions at factories that supply these APIs to pharmaceutical firms in the United States and Europe.

However, Lilly said it does not source APIs of any of its marketed drugs from China. It informed that its insulin manufacturing sites in the United States and Europe have also not been impacted by coronavirus. Lilly said that it had been closely monitoring its supply chain to analyze the potential impact of the deadly disease since the initial outbreak.

Lilly’s stock has risen 1.4% in the past year, in line with the industry.


In this context, last month, France-based drug giant, Sanofi SNY announced plans to combine its API commercial activities with six of its European API production sites and spin-off the same into an independent European API company. Meanwhile, Sanofi will decide on whether the API company should be listed via an initial public offer on Euronext Paris by 2022. In Europe, most of the pharmaceutical companies rely on Asian companies, mainly in China, for supply of the APIs used in their drugs. Sanofi believes that the new API company should ensure adequate supply of APIs in Europe and lower the need for sourcing API from China.

British drugmaker, AstraZeneca AZN, last month, along with its earnings release, had said that it expects the coronavirus outbreak in China to hurt its profits in 2020.

Lilly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked large drug company is Pfizer PFE, which carries a Zacks Rank #2 (Buy). Its earnings estimates have risen 1.4% for 2020 over the past 30 days.

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