CEO Warns Supply Chain Issues Could Halt Hand Sanitizer Production In Two Weeks
(CBS Local) -- The U.S. is on the brink of not having enough raw materials to produce life saving hand sanitizer to abate the coronavirus pandemic, says one of the country's top sellers of health and personal care products.
Resources for making hand sanitizers have already been completely depleted U.S., according to Rakesh Tammabattula, CEO of QYK Brands, a California based company that owns businesses such as Dr. J's Natural and Glowy.com Hand Sanitizer.
Tammabattula says his company is only is two weeks away from running out of alcohol for hand sanitizers even though the plants and distribution warehouses remain open.
"The current explosion in demand for hand sanitizers was never expected by anyone in the industry, and for that reason, none of the players in the market were prepared for this demand," he told VOA.
Hand sanitizer is classified as a over-the-counter drug, so ingredients must be pharmaceutical grade.
"Distilleries are definitely helping the immediate need." Tammabattula told the Corpus Christi Caller Times. "(But) we cannot guarantee the efficiency of the product made with alcohol distilled in a distillery."
Tammabattula shared his thoughts and concerns with CBS Local on Friday:
CBS Local: Hand sanitizer is obviously a much sought-after item right now as individuals and organizations are taking every necessary precaution to try and prevent the spread of the coronavirus. What is it like on the back end of this process for manufacturers trying to meet such an incredible demand?
Rakesh Tammabattula: On the back end of this, for a medium scale manufacturer like us, it has been a mix of things. Our revenues last month beat the revenues from the entire last year, and we are seeing a growing number of orders and demand every day, but that comes with many challenges one of which mainly is the extreme shortage of raw materials domestically. Raw materials from alcohol and polymer compounds to plastic bottles and dispensing pumps. They are sold out and back-ordered for about 8 weeks from all traditional sources. We are facing uncertainties on if and when the raw materials will become available. This surge in demand has also led to a steep price increase in the raw materials, which likely will result in increased prices at least in the near future.
CBS: How realistic is a possible shortage in hand sanitizer and what's being done to prevent this scenario?
RT: The shortage is somewhat realistic and likely to continue for the next 2 months at least.
CBS: Why have resources for making hand sanitizer already become depleted?
RT: Hand sanitizer was produced only by a handful of companies because it was a product with very low margins and not many people felt the need for it to make it a product in demand, but that changed overnight and the demand surged about 5,000 percent. None of the manufacturers in the industry were prepared for such a demand and that obviously depleted the resources (readily) available to produce for the need, so the entire supply chain got throttled with this situation.
CBS: What are your biggest fears for your industry with this pandemic potentially stretching on for several months?
RT: The challenges we are facing with the supply, though we expect it to be short term, we have already seen a big increase in the prices of the raw material, which are driving up our costs a lot. With more players getting into manufacturing hand sanitizers now, we expect prices to rise and possibly even a bidding war for materials if the shortage (of materials) continues. We need to demand answers from the government on how they plan to keep everyone in these facilities safe. It's inhumane for us to turn a blind eye towards this.
CBS: And conversely, what are your hopes? How optimistic are you that things will play out in an ideal fashion?
RT: The ideal outcome would be the pandemic not taking many lives as we all are fearing, and that is possible with everyone maintaining proper hygiene and definitely using hand sanitizers as often as necessary.