Del. companies big, small impacted by coronavirus

The spread of COVID-19 has brought the Chinese market to a standstill. PHOTO COURTESY OF CDC

While much of Asia remains gripped by the daily updates related to the coronavirus outbreak in China, half a world away companies in Delaware are reassessing their economic outlooks with a closed overseas market as others are seeing opportunities to help.

DuPont and Halosil International are sending equipment and protective clothing to try to stem the spread of the virus. Meanwhile, publicly traded companies like AstraZeneca and Chemours are discussing how manufacturing shutdowns and travel restrictions have forced them to assess supply and sales markets.

The coronavirus disease, also referred to now as COVID-19, was first reported in the Chinese city of Wuhan in December 2019 and has since spread worldwide as people travel from Mainland China. To date, more than 75,000 people have contracted the virus, and more than 2,100 have died from the disease that is primarily spread by coughing or sneezing.

Because of the ripple effect from the slowdown of the world’s second largest economy, analysts are worried that the longer the coronavirus outbreak persists in China, the greater the threat of a worldwide economic recession becomes. In Delaware, companies are among those feeling the heat as they readjust expectations in 2020.

Market impacts

Major Delaware employers like AstraZeneca and Chemours are reporting some worsening outlooks in sale markets due to the lingering impact of coronavirus in China.

In a Feb. 14 earnings call, AstraZeneca executives said that they anticipate dealing with an impact from coronavirus for “up to a few months,” which could change whether the pharmaceutical maker expects high single-digit or low double-digit percentage growth this year.

AstraZeneca executives said the coronavirus will slow its sales in China for months. | PHOTO COURTESY OF ASTRAZENECA

“Right now, the impact is mainly [that] our salespeople cannot easily visit the hospital and access to the health care professional because doctors, especially some of the specialty, are focusing on fighting the epidemic,” said Leon Wang, executive vice president of emerging markets for AstraZeneca. “And patients now, really instead of visiting hospitals, they go to a pharmacy to refill prescriptions and also they go online to consult doctors and get their prescriptions refilled.”

The British-Swedish pharmaceutical maker behind drugs like Symbicort, Nexium and Crestor, which has its U.S. headquarters in Wilmington, has invested heavily into China, with roughly a fifth of its sales coming from the market.

Despite the virus’s impact on sales opportunities, Wang noted that a “resilient” AstraZeneca is minimizing the business interruption by working ahead. He noted that AstraZeneca still has upside in China once the outbreak subsides.

Meanwhile, Chemours, the chemical company based in Wilmington, advised analysts that it was better protected from the impact of coronavirus.

Chemours President and CEO Mark Vergnano reported that while about 10% of the company’s revenue comes from China, it was insulated on the production side. The company’s Chinese production plants primarily make fluoropolymer that is used in Chinese manufacturing.

“So we’re not seeing a whole lot of disruption in our supply chains from that standpoint,” he told analysts in a Feb. 14 earnings call, noting its titanium dioxide product used in China is primarily manufactured in Taiwan and therefore largely unaffected by the outbreak.

Vergnano did note, however, that decreased production in automotive and semiconductor sectors have led to continuing slower sales for fluoropolymers.

“Automotive continues to be weak. We expect [semiconductor] to pick up as we come out of the first quarter. But right now, I’d say those markets are definitely weak,” he said.

Concerns stifle travel

The coronavirus outbreak has also led to decisions to limit travel for some Delaware-based companies, such as InterDigital, a mobile technology research and development company based in Wilmington. InterDigital announced earlier in February that it would no longer attend this year’s Mobile World Congress, one of the premier global events for the mobile telecommunications industry.

In a statement, InterDigital President and CEO William J. Merritt said his company had been excited to attend the 2020 show, where it was preparing to demo a working 6G platform, but “nothing is more important to us than the health and welfare of our employees.”

 Just days after InterDigital and other companies, like LG, ZTE, Ericsson and Amazon, pulled out of attending the event in Barcelona from Feb. 24 to 27, its organizer cancelled the trade show.

Meanwhile, World Trade Center Delaware, the state’s international trade association, rescheduled its attendance at the 2020 World Trade Center Association’s Annual General Assembly in Taipei, which was originally scheduled for March 1 to 4, but is now moved to Sept. 20 to 23.

WTC Delaware President Carla Stone told Delaware Business Times that having to push its attendance at the conference delays its ability to get information on Delaware business in front of overseas decision-makers.

The Chinese travel ban enacted in the outbreak’s wake has also prevented roughly 225 students at the University of Delaware from returning to the Newark campus for the start of the semester, officials reported. Two students in Delaware were also tested in February for possible exposure but were not found to be infected with the coronavirus.

UD spokeswoman Andrea Boyle Tippett said the students stuck overseas are not expected to return this semester and were offered options of either taking leaves of absence or completing their work remotely.

Products seek to aid

Delaware companies large and small are also contributing to the response in China, with donations and sales seeking to get needed medical equipment to hospitals.

DuPont announced that it has created a China response team that is coordinating directly with the key agencies in China to get needed protective equipment directly to the health care workers on the front line, as quickly as possible.

Officials said that included ramping production capacity for protective garments in manufacturing facilities outside of China, as well as expanding capacity in the country.

DuPont is also donating three types of personal protective garments, as well as probiotic products to help regulate and improve immunity, to the most affected areas through the China Red Cross Foundation to protect health care workers and front-line personnel.

“We will continue to work with our entire supply chain as well as the direct responding agencies to coordinate the most efficient ways to get the needed protection to China healthcare workers and public servants,” the company said in a statement.

Halosil International is sending its disinfection fogger unit to China. | PHOTO COURTESY OF HALOSIL

Meanwhile, Halosil International, a small disinfection system manufacturer based in New Castle, has also been ramping up production of a fogger machine that sterilizes exam rooms and surgical suites.

Maryalice StClair, vice president of business development at Halosil, told DBT that her company is “really all set up to deal with this crisis.”

StClair noted that Halosil has been shipping its HaloFogger to Chinese buyers for the last six years, a relationship that was aided by efforts from the U.S. Commercial Service and Export Delaware.

“We had identified a Chinese trading partner to have our disinfectant certified with the Ministry of Health,” she explained of the needed approval to sell the product in China. “We really developed this partner who started out small and recently formed a partnership with a larger company to expand our reach.”

With the coronavirus advancing concerns for hospitals seeking to stop its spread, Halosil has added another production line to its Fort Washington, Pa., production facility to fulfill an order of more than 100 units headed to China, StClair said. Each unit has a retail price of about $10,000.

 “We usually fill from an inventory, so we’re producing as many as we can,” she said. “We also have to fill our other orders for those outside China.”

With direct flights to China from the U.S. largely canceled, StClair said that arranging for the units shipping has been more difficult than usual though. The company has been booking flights through nearby countries like South Korea and Vietnam, and then catching regional flights into China. StClair noted that they were able to arrange its first sea shipment in recent days.

The 12-year-old company primarily sells its products to hospitals, schools, daycares and laboratories to disinfect spaces of concern. The hydrogen peroxide-based mist created by the golf bag-sized unit kills 99.9999% of spores, viruses, bacteria, and fungi.

Although getting units to China has been the largest end market right now, StClair noted that adjacent markets like South Korea – which is now seeing an uptick in coronavirus cases – are also placing orders for the units or the disinfectant solution.

“In fact, the South Korean government recently gave grants to 25 hospitals to buy disinfectant equipment,” she said.

Has your business been impacted by the coronavirus outbreak? If so, please contact Jacob Owens at jowens@delawarebusinesstimes.com

By Jacob Owens

jowens@delawarebusinesstimes.com