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Quiz: What does it mean to be short? When it comes to inflation, many of us have recently learned that yes, it means temporary, as most people predict, but not necessarily short-lived as many people assume. In an interview with the Financial Times this week, Thomas Polen, the CEO of the medical technology giant BD, set a timetable for the "inflationary pressures" that we all feel painfully: inflation will "continue for a long time." For two years, it is unlikely that prices will return to their pre-COVID levels," he told the Financial Times.
BD is one of the largest medical device companies in the world. It is also one of the largest users of plastic injection products in the world. One more thing: BD happens to be the world's largest manufacturer of syringe equipment. All of this gives Polen a unique perspective on medical plastics, inflation, and the supply chain.
Pollen told the Financial Times that during the pandemic, the price paid by BD for raw materials such as plastics doubled, and transportation costs tripled. "There is no such thing as an escape from inflation," he said. He added that low-cost products manufactured with a high degree of automation are most affected by inflation because “raw materials account for most of their costs.” The Financial Times wrote that this brings us back to syringes, which are sold at a price per piece. At about 10 cents, it is the most cost-effective deal in the healthcare sector. Pollen said their prices could rise by about a cent or two. This is not the end of the world, but there is another more serious problem that may plague the syringe-a potential shortage.
Earlier this month, the World Health Organization warned that there may be a shortage of 100 to 2 billion syringes for COVID-19. According to Reuters, about 6.8 billion COVID-19 vaccines have been vaccinated globally, almost twice the number of conventional vaccines. Reuters quoted WHO expert Lisa Hedman as saying that the total manufacturing capacity of immunization syringes is about 6 billion. Hedman said that no mathematical genius is needed to infer that if we want to avoid shortages, more factories will need to switch to producing "correct shooting equipment."
The so-called "correct type" syringe, Hedman refers to a disposable device that automatically locks after injection to prevent reuse, which is required by WHO and UNICEF guidelines. According to Forbes, low- and middle-income countries will bear the brunt of the shortage of syringes. One concern is that the shortage may encourage the unsafe reuse of unsafe syringes and needles, especially in poorer countries.
It is indeed a serious guess. Many things can go wrong, but let me suggest an alternative.
The cost of resin has been declining in the past few months, and this trend is expected to continue, as documented in our resin report column. The supply chain bottleneck we are really encountering is temporary, and it is the result of consumer demand for products that will eventually be satisfied. When this happens, the inflation rate will re-enter the atmosphere. As for the possible shortage of needles, Hedman of the WHO told the Financial Times that it takes "time and investment" to transfer production capacity to the production of automatic banned syringes, which is correct. It requires money and will, but does it take a lot of time? In the early days of the pandemic, we resolved the severe shortage of personal protective equipment and ventilators in record time by reorganizing factories and jumping out of our inherent mindset.
If necessary, we can do it again.
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