Eagle Health expands disposable mask manufacturing in China amid COVID-19 pandemic

Eagle Health ASX EHH medical face mask expanded production coronavirus
Eagle Health is set to ramp up production of disposable medical masks to 300 million per year.

Amid the worsening COVID-19 pandemic, integrated health and nutritional products business Eagle Health (ASX: EHH) has announced expanded production of disposable medical masks at its pharmaceutical facility in Xiamen, China.

The first two of six production lines are under trial production at the Xiamen facility.

With all six lines at full capacity, Eagle Health expects to produce 300 million units annually.

In terms of mask specifications, Eagle Health intends to use two source materials to manufacture masks with a minimum bacterial filtration efficiency of more than 95%.

The company’s medical masks are being manufactured in accordance with standards set forth by Chinese regulator and will comply with guidelines provided by the State Food and Drug Administration, the overarching gatekeeper for new medical products coming into China.

Coronavirus prompts demand

The move comes at a time when millions of people in Asia and beyond are struggling to cope with the severity of the outbreak that has quickly turned into a pandemic over the past two months.

Both consumers and medical professionals continue to report dwindling supplies of various medical equipment including hand sanitiser and medical masks. Other services and amenities are also suffering due to widespread shutdown of travel routes, the introduction of quarantines and the cancellation of popular events.

In response to the COVID-19 pandemic, Chinese authorities chose to impose compulsory mask-wearing protocols in public places across most provinces and major cities throughout the country.

Demand for medical masks has been so great that the regulation of China’s mask supply was switched to the National Development and Reform Commission (NDRC), the country’s economic planning agency.

The change was a direct result of the current global supply shortage of medical masks, which has become a high demand commodity in China.

Mask sales have boomed both offline and online with price gouging reported across all major online retailers such as Amazon and eBay.

Eagle Health stated that it is “now well-positioned to contribute to fulfilling the shortage of local and global demand, which in the company’s opinion may remain for the foreseeable future”.

Early sales

With production being ramped up, Eagle Health told the market that it has secured its first purchase order for its disposable medical masks from Hainan Yiling Medical Industry Development, a subsidiary of Yiling Hospital Management Group, for 3.2 million masks.

Eagle Health confirmed it has already received a partial upfront payment and expects to finalise the order within the next 10 days.

“The company is in the process of securing further large orders from various parties both In China and internationally and will update its shareholders accordingly,” Eagle Health said.

In a further operational boost, Eagle Health said its Xiamen facility had been identified as a candidate by the Chinese Government as a strategic facility for the provision of vital medical and health products.

The company’s subsidiary Xiamen Eagle Don Pharmaceuticals is expected to be granted so-called “Green Channel” status to expedite registrations the facility may require for further expanding its operations and products in future.

Product spectrum

As an indication of the multi-faceted demand for medical supplies in China, Eagle Health signed an agreement with Zoono Group (ASX: ZNO) last month, to distribute co-branded antimicrobial products and offline retail sales in China.

Zoono sells a range of antimicrobial products using purified, deionized water and a proprietary “quaternary ammonium antimicrobial compound” that reportedly improves upon existing alcohol-based products.

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