U.S. hygiene push could fuel a glove manufacturing boom
More stringent hygiene in U.S. hospitals and labs could boost sales for Malaysian rubber glovemakers who produce three out of every five pairs used in the world.
Demand for medical gloves is seen increasing ahead of guidelines from the U.S. Pharmacopeia Convention that come into effect December 2019. Known as the USP 800, the bestpractices standard for pharmacies and hospitals will recommend health workers don two pairs of gloves to handle hazardous drugs.
As the U.S. accounts for a third of global demand for medical gloves, the new standards — if widely enforced — could push de mand from that market well above its “normal” 8 percent to 12 percent annual growth rate, said Malaysian Rubber Glove Manufacturers Association (Margma) Vice President Supramaniam Shanmugam.
“If it’s mandatory — then boom!” Supramaniam said in August. “I know the amount of gloves that we export is going to be double now. But we’re still studying how the implementation is going to be like.”
Top Glove Corp., the biggest of Malaysia’s 10 publicly listed rubber glovemakers by revenue, derived 31 percent of financial year 2017 revenue from North America, while rival Hartalega Holdings sits at about 59 percent. The region accounts for about a fifth of sales at Riverstone Holdings and UG Healthcare, both Singaporelisted but Malaysiabased producers.
Singapore Exchange noted that the three glovemakers that it lists — Riverstone and UG Healthcare along with Top Glove’s secondary listing — averaged a 12month total return of 35 percent. The exchange said prospects for the global rubber glove industry were robust given expanding health care demand.
Other investors say it’s hard to quantify the exact impact from the new guidelines.
“It’s true that USP 800 might drive some incremental demand for gloves, although the quantum of that additional demand may not be material in the context of current global glove demand,” said David Smith, the head of corporate governance at Aberdeen Standard Investments, which owns Riverstone shares.
Still, Riverstone sees its customers buying more gloves from the third or fourth quarter of 2019.
“It’s an additional 3.5 billion pair of gloves every month,” said CEO Wong Teek Son.
Margma’s Supramaniam says Malaysian producers can step up production if required as the utilization rate at the country’s 100odd factories stands now at about 75 percent.
“The industry is absolutely prepared,” he said.