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To combat the pandemic-like situation with coronavirus spread, the Trump administration has ordered 35 million monthly N95 face masks from industrial giant 3M. The company has ramped up the production. 3M (NYSE: MMM) stock is up.
The concerns of the coronavirus spread are rising every-single-day and the U.S. doesn’t seem to be prepared. On Wednesday, the Department of Health and Human Services clarified that the U.S. has only about 1% and not 10% of the N95 respirator masks. Such a situation has influenced the 3M (NYSE: MMM) stock.
On Wednesday, the 3M stock price surged above 6% to take the stock above $150 levels. At the time of closing, its price was $153.98.
At the moment of writing, in the premarket the stock is a little bit down (less than 1%).
This is really concerning if the COVID-19 virus spreads across the country. The agency also said that in case of the virus outbreak, the U.S. Health-care system will need up to 3.5 billion N95 respirator masks over a year. Note that the N95 masks are currently in demand as they filter out 95% of all airborne and liquid particles.
Reporting the exact data, the Strategic National Stockpile said that they have approximately 12 million medical-grade N95 respirator masks and 30 million surgical face masks. Well, this is much below the expected requirement in case of a pandemic scenario.
Interestingly, the agency reported after WHO officials called medical supply manufacturers to “urgently increase production”. Citing the global outbreak the WHO has also asked manufacturers to increase their supply by a minimum of 40%. In a news conference in Geneva, Tedros Adhanom Ghebreyesus, director-general of WHO, said:
“Supplies are rapidly depleting. WHO estimates that each month, 89 million medical masks will be required for the COVID-19 response, 76 million examination gloves and 1.6 million goggles”.
3M Receives Order for Making Millions of Masks, MMM Stock Is Up
So far, the U.S. has registered 129 infected cases of COVID-19 with over nine deaths, as per the Centers for Disease Control and Prevention. Dr. Anne Schuchat, principal deputy director of the CDC, also warned Congress. She stated that the outbreak is already meeting two of three criteria under her designation.
“It is a new virus, and it is capable of person-to-person spread,” she said. “If sustained person-to-person spread in the community takes hold outside China, this will increase the likelihood that the WHO will deem it a global pandemic.”
To combat this situation, the Trump administration has ordered millions of N95 masks from 3M. Last Saturday, Vice President Mike Pence assured that the government is working on getting more supplies. In a White House briefing, he said:
“We’ve contracted now with 3M; 35 million more masks per month will be produced, and we’re also going to be working with other manufacturers”.
A 3M spokesperson told The Star Tribune that the industrial giant was getting ready for the government’s proposal. But the company was “not yet under contract for the volume mentioned” by Pence. In a press release, 3M also confirmed that the company is ramping up production as quickly as possible. It said:
“3M is committed to supporting the public health and government response to the coronavirus outbreak. Global demand for supplies used to treat and help protect people, such as respirators, is currently exceeding supply. 3M expects demand for respirators to outpace supply for the foreseeable future. 3M is ramping up production at its manufacturing facilities around the world including in the U.S., Asia, and Europe as quickly as possible”.
The new contract is like to bring $1 billion in coronavirus-related sales for 3M. During the H1N1 swine-flu pandemic, 3M raked orders worth around $350 million.