Update on Hurricane Maria’s Impacts on Life Sciences and Healthcare Supply Chains in Puerto RicoEverstream Team
- Hurricane Maria made landfall in Puerto Rico on September 20, causing severe damage to the country’s infrastructure, including the power grid, mobile networks and the water system.
- At San Juan International Airport, operations remained significantly limited at San Juan’s International Airport (IATA: SJU) due to the widespread power outage.
- Seaports at San Juan, Guayanilla, Tallaboa, and Salinas have fully reopened, but transporting goods remained difficult due to blocked roads and scarce fuel supplies.
- Puerto Rico is a centerpiece of global Life Sciences and Healthcare supply chains, and many of the top 20 companies in the sector were assessing damages at manufacturing plants.
- Due to long-term outages of mobile and power networks, shortages of fuel and labor as well as limited air and ocean freight capacity, shortages of some LSHC products and supplies may arise in the coming weeks.
Hurricane Maria made landfall in southeastern Puerto Rico on the morning of September 20 as a Category 4 storm on the Saffir-Simpson scale, causing severe damage to the country’s infrastructure, including power grid, telecommunications networks and the water system. Large parts of territory were inundated, and roadways were rendered impassible by floodwaters, landslides, downed trees, and other debris. As of this writing, at least 16 storm-related fatalities have been reported, and it is believed that at least 11,000 residents are currently being housed in public shelters. Damage assessments currently remain ongoing in many areas and major logistics challenges and safety concerns persist throughout the territory. About 96 per cent of residents remained without power on September 27 and hospitals, electronic payments systems and ATMs were still offline in many areas. Major losses of perishable goods such as food and pharmaceutical goods have occurred due to the lack of refrigeration. Roughly half of theisland’s residents remain without access to drinking water. On September 22, a structural failure was also reported at the Guajataca Dam, located along the Guajataca River in the northwestern municipality of Isabella as the result of heavy rainfall and high water levels. Authorities thus issued evacuation orders for residents downstream, and both the Isabela and Quebradillas municipalities remain under flash flood warning.
Network Disruptions Impacting Airport Operations
On September 27, operations remained significantly limited at San Juan’s International Airport (IATA: SJU) due to the widespread power outage caused by Hurricane Maria. Consequently, computer systems that are utilized to issue boarding passes and control luggage remain offline, and takeoffs were being limited to daylight hours between 7:00 AM and 5:00 PM local time. Only 18 round-trip commercial flights were able to takeoff on September 27, and local news outlets reported that hundreds of passengers remain stranded in the airport. Backup generators were being used to power essential systems. The Federal Aviation Administration (FAA) reported that many of the radar systems that were damaged by the hurricane have been brought back online, although much of the equipment was not functioning at normal levels of efficiency. One long-range radar site remained entirely offline, and repair efforts have reportedly been impeded by downed trees in the surrounding area. The FAA relocated a group of air traffic controllers from San Juan to Miami last week in anticipation of the hurricane. The FAA reported that since the group was currently working out of Florida instead of Puerto Rico, additional safety precautions were necessary which in turn resulted in extra delays of up to three hours for departing planes. Further compounding the challenge, the Federal Emergency Management Agency (FEMA) has required that SJU give priority to arriving military flights carrying humanitarian aid. At this time, no estimates have been made as to when air traffic may fully normalize. SJU reported that no international flights will be authorized until further notice. Most Puerto Rico-bound air freight shipments were reportedly being kept at the last in-transit airport. Outside of San Juan, the following airports have reopened but continue to offer limited service: Ponce’s Mercedita Airport (PSE), Aguadilla’s Rafael Hernández Airport (BQN), Ceiba’s José Aponte de la Torre Airport (FAJ), Isla Grande’s Fernando Luis Ribas Dominicci Airport (SIG), and Vieques’s Antonio Rivera Rodriguez Airport (VQS).
Limited Operations at Seaports
Seaports at San Juan, Guayanilla, Tallaboa, and Salinas have fully reopened, and were operating without restrictions. Ports in Arecibo, Guayama, Fajardo, Culebra, and Vieques have reopened and are operating with restrictions, which include limiting traffic to daylight hours only. All other ports in the territory remain closed. Officials reported that the reopening of the territory’s ports was a top priority for relief and reconstruction efforts, with some vessels carrying humanitarian relief and commercial cargo at the Port of San Juan. Earlier this week, some carriers and forwarders indicated that many Puerto Rico-bound shipments were reportedly being kept at the last in-transit airport or seaport. On September 28, the US administration waived the Jones Act in an effort to get fuel and emergency supplies more quickly to the island, which is still dependent on diesel to generate most of its power. The Jones Act usually limits shipping between coasts to vessels which are built, owned, flagged and crewed in America. Goods going from the mainland to Puerto Rico would have to travel on U.S. ships, even if this would not be the most economical transport or readily available. These shipping restrictions were also lifted in the aftermath of Hurricane Harvey and Irma.
Power Outages and Fuel Shortages
Many government offices, businesses, and private citizens continue to rely on gasoline powered generators. This has in turn resulted in a rush on gas stations, particularly in San Juan. Many gas stations in municipalities outside of the capital city sustained damage and remain closed. Thus, residents from some outlying districts continue to travel to San Juan in order to obtain fuel, with waiting times of 5-8 hours being common. Although Governor Rossello reported that the territory has a sufficient fuel supply to last for weeks, distribution has been impeded in the aftermath of Hurricane Maria, largely due to obstructed roadways and infrastructure damages. Authorities expected fuel distribution to improve soon, although no timetable has been provided.
Impact on Pharmaceutical Supply Chains
Puerto Rico is the fifth largest area in the world for pharmaceutical manufacturing and thus a centerpiece in global supply chains of the Life Sciences and Healthcare (LSHC) sector. There are more than 50 pharmaceutical plants in Puerto Rico, and 12 of the top 20 companies in the industry have manufacturing facilities in the country. In addition, seven of the top 10 drugs sold globally are produced in Puerto Rico. US Bureau of Labor statistics showed that the industry accounted for USD 16.3 billion – or more than 80 per cent of Puerto Rico’s export market in 2016. Earlier this year, American Airlines launched a daily, nonstop widebody service between San Juan Luis Muñoz Marín Airport (SJU) and Philadelphia International Airport (PHL) to accommodate the growing trade of pharmaceutical products being shipped from Puerto Rico to or through the United States.
The following major LSHC companies confirmed that their manufacturing operations have been at least partially disrupted:
- An American global pharmaceutical company suspended normal manufacturing operations at two of its Puerto Rico plants, as the company evaluated the status of the island’s infrastructure and the status of its employees. On-site power generators were reportedly functioning. The company has stated that it maintains adequate inventory at its manufacturing sites around the world to ensure a reliable supply of medicine for patients.
- A multinational pharmaceutical and biopharmaceutical company’s plant in Canovanas halted production, though it reportedly has backup power available. Limited staff and electricity as well as slower ports operations were said to be the major obstacles to resuming full operations. As of September 27, the company said it was still receiving updates regarding the status of its plant in Canovanas and its employees.
- An Ireland-based medical device company was said to have closed its manufacturing plant in the region, although the company reportedly stocked inventories and obtained generators ahead of the storm.
- An American multinational biopharmaceutical company said that it was still working to determine the safety of its employees, having sent most of its local workers home to take shelter before the storm. No product supply disruptions were expected according to the last official statement made on September 22.
- Another US pharmaceutical company said that its plant in Humacao appeared to have suffered some damage during the hurricane, but a second plant in Manati remained harmed. Regardless of the damage, it believed to have mitigated the risk to product supplies.
- An American pharmaceutical corporation confirmed that a preliminary assessment indicated that two of the company’s three manufacturing plants had minimal damage, while a third had minimal to moderate damage to parts of the facility.
- An Illinois-based pharmaceutical company stated earlier this week that its pharmaceutical facilities, which are running on independent power generators, remained intact and operational, with teams working to restore normal operations.
- Another US-based healthcare company confirmed it has lost multiple production days at plants in Puerto Rico which will delay its ability to restore shipments of dextrose and sodium chloride that were already in short supply on the US mainland. Mitigating efforts that were taken included shipments of finished products off Puerto Rico ahead of Hurricane Maria.
As of September 28, many of the major LSHC companies were still assessing damage and prepared for the possibility of several months of production downtime as early estimates suggested that power might not be restored to the entire island before the end of 2017. Although most plants have backup power generation, many employees were unavailable to help resume manufacturing due to personal circumstances. And if plants were not damaged directly by the storm or subsequent flooding, many companies were likely to suffer from limited air or ocean freight capacity at ports and airports due to humanitarian relief efforts and reduced commercial cargo handling capacity. Furthermore, executives were reportedly forced to use satellite phones to communicate, since about 94 per cent of mobile phone services were still not working. But the most challenging hurdle in the aftermath of Hurricane Maria was transporting generator fuel to LSHC manufacturing locations, slowing companies’ efforts to resume normal production, according to a non-profit group that addresses emergency supply chain crises.
On September 25, the US Food and Drug Administration (FDA) stated that critical drug shortages may soon arise if production lines were unable to resume quickly. To mitigate such shortages, a broader mandate was given to an FDA “hurricane shortages task force” which could reportedly lead to a scenario where the FDA may allow some leeway in product storage and shipment conditions as long as companies can prove that specific product lots maintained biological activity at their destination. In Puerto Rico, one of the major challenges for supply chain integrity was reportedly maintaining adequate refrigeration of biopharmaceuticals whose structure and activity can be destroyed by heat.