Late last Friday, George Darmis — the inventor of sippy-cup teddy bears and flap-proof flip-flops — had a revelation: He could use his experience sourcing items from China to track down, import, and sell millions of the N95 respirator masks that those on the front lines of the coronavirus epidemic desperately need.
So Darmis, who lives in Gladwin, Michigan, contacted 42 different Chinese manufacturers, and then reached out to the White House, the governor of Michigan, and the Greater New York Hospital Association to see if they wanted to buy from him. He promised them price transparency and speedy delivery, and all he asked in exchange was a modest 10% to 12% profit margin.
“As an inventor, I could take a look at this market and see that it was worth it,” said Darmis, who so far hasn’t booked any sales. “I have factories ready that can do 150,000 masks a week.”
With each passing day, the nation’s stock of personal protective equipment such as N95 masks, gowns, eye shields, and surgical gloves grows ever thinner. Although the US is expected to need some 3.5 billion respirators to deal with the pandemic for the next year, the Strategic National Stockpile contains just 13 million. To conserve supplies, many hospitals are keeping protective equipment under lock and key and asking doctors and nurses to wash and reuse masks that were designed to be disposable.
Since January, China — which manufactures nearly all the world's personal protective equipment — has been sucking up the entirety of its production to handle its own coronavirus outbreak.
But as that nation’s infection rates have fallen, some shipments have begun trickling out. On Tuesday, the Food and Drug Administration joined with the Customs and Border Patrol to issue guidance that would make it easier to import masks, respirators and coronavirus test kits for “compassionate use/emergency use.”
The fast-changing situation has created a wild frenzy of activity among manufacturers, importers, entrepreneurs, speculators, and Good Samaritans hoping to grab a piece of the thawing market as soon as possible. Wholesale prices for N95 respirators, which in regular times retail for around $1 apiece on store shelves, have soared as high as $12, and Chinese factories that have nothing to do with the medical supply industry have scrambled to retool baby diaper and sanitary napkin production lines overnight so they can pump out high-demand medical gowns and face masks.
Twitter, Instagram, and Facebook are swarming with advertisements for masks, hand sanitizer, and digital thermometers ready for rapid air shipment to the US and Europe. Chinese companies that normally sell scooters, barbecue grills, or tennis shoes are suddenly hawking masks. The online marketplace Alibaba carries more than 35,000 separate listings for N95 masks alone. There are volume discounts, but nothing looks remotely cheap.
Jack Wishy owns a company that for several years imported LED lights from China, but early this month he started getting emails from his suppliers asking if he would be interested in purchasing masks instead. At first, he was hesitant, but as he heard ever-grimmer news about the shortage, he decided to take a chance.
“I just got tired of seeing these hospitals saying they don’t have masks,” said the Indiana entrepreneur, who figured he could make some money while doing a good turn. It didn’t take long for Wishy to discover that the mask market was like the Wild West. One supplier quoted a price of $12 per mask, while another said it could produce them for $2.80. Including shipping, Wishy was finally able to secure a supply for about $3.50 apiece. He posted them for sale on his Facebook page for $4.90, nearly five times the typical price, and said he has so far sold about 1,500 masks directly to doctors.
He doesn’t view himself as a profiteer. “The masks are available,” Wishy said. “I’m a tool that can help provide someone with something.”
Profits were the furthest thing from the minds of Ben Wei and Jinny Jeong when they and other friends launched a GoFundMe campaign aiming to deliver one million masks to health care workers in hard-hit New York City, which currently has almost 15,000 of the nation’s more than 55,000 diagnosed cases of COVID-19.
In just five days, they’ve raised more than $230,000, making their campaign one of the most effective among dozens that have popped up around the country. But, the organizers soon found out, raising money proved easier than finding an affordable and reliable source of masks.
On Friday, one source in China promising Honeywell brand masks quoted them to Wei and Jeong at $3 apiece, and demanded full payment up front, rather than a standard deposit. By the next morning, the same contact wanted $4 for the same masks. Another supplier, claiming to have 3M respirator masks directly from the factory, asked $7.
“It's mind-boggling,” said Wei, an entrepreneur with experience in the tech and nonprofit sectors. “We have people working for us on the ground now in China. They are going into factories. They are fighting for whatever they can get. There is a dogfight outside the factories because everyone wants to be the first to bid.”
The situation is complicated by the fact that many factories don’t have proper certification from the Food and Drug Administration or the Centers for Disease Control and Prevention to produce N95 masks, while others aren’t certified under China’s testing standards to produce the nearly identical KN95 mask. Getting those certifications is a lengthy and expensive process, and the special fabric that filters out tiny particles has been in extremely short supply, so many fly-by-night factories have been pumping out counterfeit or incomplete masks.
Improperly made respirators might not block the tiny particles that could carry the coronavirus. But without rigorous laboratory testing, it’s nearly impossible to distinguish between a real N95 or KN95 mask and a counterfeit one.
US authorities maintain a list of manufacturers that conform to national standards. But there is no equivalent list of manufacturers that conform to Chinese or European standards, which hospitals in the US have gradually begun to accept under relaxed CDC guidance issued late last month.
Many Chinese suppliers will send over screenshots of certifications, but all too often those are blurred or bear the hallmarks of a shoddy Photoshop job. And some vendors offer masks alongside dubious items such as home antibody tests — none of which have yet been developed — casting significant doubt on the quality of their entire product lines.
“There's just a lot of double-checking and really making sure that the certificates are right,” said Alan Silberberg, who owns a cybersecurity business based in LA and has been trying to put together a shipment of masks and other PPE to bring back to the US and sell.
That verification is hardly the only hurdle. Suppliers are demanding full payment up front, with no guarantees that the shipments will materialize or clear customs in the US. New guidance issued by the FDA on Tuesday allows for emergency use of respirators certified under standards set by five non-US countries plus the European Union, but does not make such a concession for masks certified by China’s health authority. That means that shipments of KN95 masks could potentially get halted at the border.
The cost of freight, meanwhile, has skyrocketed as airlines have canceled many of their flights to and from China. Finding space on cargo jets operated by FedEx, UPS, or DHL can be difficult, with prices reportedly doubling or tripling. Silberberg said he’s now looking for financing to charter an entire jet — at a cost of $900,000 — to carry his precious cargo across the Pacific.
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For those with established relationships with reliable manufacturers and shippers, the chaotic marketplace has proven more navigable — and a welcome opportunity in a suddenly frozen economy.
Lynne Malkoff, based outside of Dallas, owns a company that specializes in selling promotional items and giveaways made in China. But as the coronavirus spread around that country and group events were canceled, that business dried up entirely.
Before that happened, however, the company’s contacts in China began offering up the opportunity to purchase surgical masks, gloves, and large quantities of hand sanitizer. Malkoff’s daughter lived in China, and so she was aware of the potential impact of the coronavirus. She took a chance and started ordering the supplies in volume.
Malkoff said she’s been selling to some of her existing clients, who are desperate for masks and hand sanitizer, and has also found a few receptive local hospitals and medical clinics. She charges customers her wholesale price, plus what she calls a “handling fee” that helps her avoid laying off her staff — including one employee who now does nothing but negotiate with Chinese suppliers. Malkoff is currently trying to figure out how she can ship 100,000 bottles of hand sanitizer to the US by airplane.
The most important thing, Wei and Jeong said, is getting masks and other gear into the hands of doctors.
On Tuesday, they received their first shipment of respirators — 7,200 Chinese certified KN95s that cost about $2 apiece — and quickly distributed them to health care providers at hospitals in Queens, Manhattan, the Bronx, and New Rochelle. They expect their second shipment early next week and are launching a similar effort in San Francisco.
“The situation is really dire. Doctors and nurses are wearing trash bags,” said Jeong. “We want to get these masks into the hands of doctors without them having to bid online or risk getting counterfeit masks. These are America's best doctors going around begging for masks.”
Lynne Malkoff’s name was misspelled in a previous version of this post.