Croda, Thermo Fisher may get drawn into vaccine battle as EU hardens stance

Brexit 165 China 2776 Coronavirus 479 European Union 721 Health Care 306 U.S. 4938 United Kingdom 316

The EU is taking a tougher line on exports of COVID-19 vaccinations. European Commission President Ursula von der Leyen has stated that decisions on whether to approve shipments “will reflect whether exports to countries who have higher vaccination rates than us are still proportionate” as well whether a given country is also producing vaccines and exporting them too. That would appear to be targeted at the U.K., which could cut the country’ vaccine rollout by two months according to The Guardian

President von der Leyen has also stated that the EU will not donate vaccine doses to developing economies until manufacturers in the region have achieved “a better production situation“, Deutsche Welle reports. An EU Council meeting scheduled for March 25 will determine whether export rules will be strictly enforced or even tightened.

That’s a more hawkish tone than embedded in existing policy, as outlined in Panjiva’s research of Feb. 1, but is consistent with the recent blocking of exports to Australia from Italy – though that was only one of over 300 requests filed.

Panjiva’s analysis of official data shows that the U.K. only accounted for 6.5% of all EU exports of all vaccines in 2020 after a drop of 54.6% year over year. That came despite a 12.8% rise in shipments in December which may have included the first shipments of COVID-19 vaccines. 

It’s worth noting that data for detailed EU exports appears to be running behind their normal schedule. Aggregate data for January was published on March 18 while HS-level data has yet to arrive on the Eurostat database as of midday CET on March 22.

EU vaccine exports to U.K. recover after downturn during most of 2020

Chart segments EU exports of vaccines by destination. Calculations based on Eurostat data.  Source: Panjiva

Aside from potentially requiring private firms to breach their delivery contracts with countries outside the EU the move is likely to draw similar measures from other countries with significant production capacity. One particular challenge may come for Pfizer’s supply chain in the EU which relies on imports of lipids from the U.K. according to Bloomberg reports.

The U.K. only accounted for 8.0% of the EU’s imports of lipid-type pharmaceutical ingredients in 2020, though a 15.1% year over year increase in shipments in Q4’20 compared to growth of just 2.0% in all EU imports would suggest that ratio may increase.  Exporters from the U.K. to outside the EU, who may also have picked up EU-bound sales, include Croda and Thermo Fisher.

Yet, the EU is far more dependent on the U.S. (27.8%), China (26.4%) and India (14.3%) for its lipid sourcing. Competition for access to resources will likely only increase. The EU may need to follow a similar tack to that followed by the U.S. where the Biden administration has launched a review of critical supply chains including APIs.

U.K. may have minimal lipid export leverage

Chart segments EU imports of lipids by origin on a trailing three-month total basis. Calculations based on Eurostat data.  Source: Panjiva

Copyright © 2021 Panjiva Supply Chain Intelligence, a product offering from S&P Global Market Intelligence Inc. All rights reserved.