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PPE Supply and Demand

The Facts of the Matter: The Reality of PPE Supply and Demand

Of the many subjects on the mind of dental professionals as the COVID-19 pandemic continues, the availability and cost of personal protective equipment (PPE) is at the top. PPE is the pre-requisite to opening a practice and rebuilding a business. Dental teams won’t work, and patients won’t visit, unless they feel protected.

So what’s the situation with PPE? Why has it become so scarce and why is it now so expensive?

What follows is a short analysis of the forces shaping supply and demand, and an assessment of what the future holds for PPE pricing and availability. (In the event of a second wave of the pandemic, the conditions detailed below may intensify based on the severity and duration of an additional outbreak.)

Supply Factors (near term and long term)

Near Term (3-6 months)

  • Most PPE (including masks) is produced in Asia where costs are lower
    • The pandemic broke out in Wuhan, a key PPE production hub, during the Chinese New Year
  • Rapidly changing government restrictions in Asia constrain PPE exports, although conditions are improving
  • Government restrictions on in-country distribution of PPE further constrain availability
  • Changing regulatory requirements and quality standards complicate production
  • Customs challenges occur at airports and harbors, both in exporting and importing
  • The products where supply is most limited currently are Level 3 masks, N95s, and surface wipes
  • A shortage of raw materials to manufacture PPE exists, although conditions are also improving
  • Some PPE manufacturers are focused on first meeting demand from historical customers of certain items

Long Term (beyond 6 months)

  • Production increases to begin meeting new global demand
  • Most PPE production will remain in Asia, although some production will shift to the U.S., and more so over time 
  • More companies globally will enter the PPE manufacturing industry
  • Government export and in-country restrictions will loosen as production increases
  • Raw material shortages will abate as producers catch up with demand

Demand (near term and long term)

Near Term (3-6 months)

  • Historically high demand as dental practices adopt new guidelines for PPE usage, such as N95/KN95 mask that weren’t before used
  • Occupations of all kinds now demand PPE as never before – retail, hospitality, tourism, restaurants, etc.
  • Consumer demand for PPE remains unprecedented and is unlikely to abate
  • Government demand to replenish stockpiles will remain high, including preparing for a second wave

Long Term (beyond 6 months)

  • Dental demand for PPE will plateau but at a much higher level than pre-pandemic usage
  • Certain occupations that never used PPE will adopt infection control products as standard operating procedure
  • Consumer demand may abate, but stockpiling of some amount will continue as people stay prepared for any next wave
  • Government demand to build and maintain stockpiles, especially in countries which currently have none, will emerge
  • Government demand to support in-country production and avoid overseas restrictions will emerge

Realities

  • Demand for particular PPE – notably, N95s – will continue to exceed supply in the near term
    • but should ease up by end of the year as manufacturers work to increase PPE production in the U.S. and worldwide
  • PPE costs will exceed historical averages in the near term, driven by raw material shortages, government restrictions, and demand
  • PPE costs will remain historically elevated in the long term
    • Reflecting a trade-off between domestic production and on-demand low-cost overseas production
  • Industry relies on efficient global supply chains for replenishment, which remain at risk to demand shocks