Government Operations Committee on June 12th, 2020

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Gentès.

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, because of our shortness of time, we'll have to cut you off there.

Ms. Vignola, you have five minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I thank all the witnesses for being with us.

My questions are for you, Mr. Gentès.

You started producing antiseptic gel, which saved your company. However, any new production has a financial impact. What were the financial consequences of the reorganization of your production?

[Jean-Philippe Gentès]

We're relatively lucky. We have had to invest only modest sums since our everyday job is to be the artisan of a pharmaceutical company. We already manufacture a lot of low-volume items. Compared to what I would do in a large company, my day-to-day job is to send hundreds of small packages across the country by Purolator. Most of what I produce every day fits in a package that's six inches per side. This redevelopment was therefore a natural step.

We're not a big manufacturer that produces a lot. We've been careful, as always. What's important is the 120 people who work for our company making antiseptic gel and whom we wanted to keep. This loyalty is the most important thing for us, since we experienced recruitment problems not so long ago. Maybe today's reality will be quite different.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

On the subject of transportation costs, have you had any problems with supply or customers who have said that it takes time? Have your transportation costs increased?

[Jean-Philippe Gentès]

No, our transportation costs have not increased. Unfortunately, however, we are having problems with Purolator. Order processing times have increased significantly. Normally, medicines should not spend more than five days in the transport vehicle, because the temperatures where the packages are are extremely high.

We must look to alternative solutions or other carriers to ensure that our packages are delivered within 24 hours, which is the level of service we received from Purolator prior to the pandemic.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Delivery times have gone from 24 hours to three, four or five days, roughly speaking.

I've used Purolator and other delivery services before. The payment for my purchase often included insurance. If the package arrived after three days, the payment was refunded to me. Is that still the case?

[Jean-Philippe Gentès]

No, not for us. We have so much volume that it would cost too much to insure all shipments. Ultimately, it's always the customer who pays. Normally, the loss is written off, the process is repeated and the product is reshipped.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I see.

You said prices in China are much lower than here. You may have said this before, and perhaps I missed it, but where are your isopropyl alcohol suppliers primarily located? Did you have to deal with new suppliers?

[Jean-Philippe Gentès]

Currently, for our hydroalcoholic gel, we use ethanol instead of isopropyl alcohol. On the other hand, we also buy isopropyl alcohol and have had to turn to new suppliers.

When it comes to ethanol, we have multiple sources of supply. We try as much as possible to encourage local suppliers. We have started to do business with a new distillery that opened up. We bought their first 10,000 litres of ethanol. It cost us a lot more, but I think it's important to encourage local production.

Today, unfortunately, it is a hybrid supply from Canada, Asia and Brazil. We are trying to get ethanol of acceptable quality. We have chosen not to use technical alcohol, even when Health Canada has allowed it.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I see.

What do you think explains the price differences?

Of course, it is easier to deliver ethanol that is produced locally. When ethanol is produced in China, even if there are labour costs and you use the same ingredient, it has to travel across the planet to get here, and across the continent if it comes from Brazil.

Why can't we get comparable prices in Canada? Is it because we don't put enough pressure on our suppliers?

[Jean-Philippe Gentès]

It's the law of supply and demand. If there is too much demand and too little supply, unfortunately, prices go up.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Of course.

[Jean-Philippe Gentès]

I don't know if it really costs more. Unfortunately, I don't make my own ethanol.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

You pay for it, though.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. Unfortunately, Mr. Gentès, we have to end it there.

We'll go to Mr. Green for five minutes, please.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

We've heard questions about quality control as it relates to some of the antiseptic hand gels. I'm wondering if the witness from Galenova would care to expand on that. Is he suggesting there are some serious health risks to the lower-cost hand sanitizers?

[Jean-Philippe Gentès]

I said that there could be some risks. I can tell you that every time I enter into a chain store, I look at what's available. I would say that 50% of the products I see in major retail stores do not bear any lot number or expiry date. When we're talking about pharmaceutical products, those things are basic. When you manufacture something, you must have a batch number and expiry date. If there's ever an issue, you need to be able to recall those products. It's your first basic rule whenever you manufacture a pharmaceutical product.

[Matthew Green, NDP, Hamilton Centre, ON]

It sounds very rational, in fact.

With regard to the introduction of companies not situated in this field, entering into this, trying to do their good civic duty, you mentioned that perhaps they're also not regulated in the same way that your company may be.

[Jean-Philippe Gentès]

At the moment, there are no inspections and there are no regulations. Health Canada did issue temporary licences to be able to manufacture these. I'm not saying that everything is bad, or that it was not appropriate to do it at that moment when it was carried out, but today I think it's time to try to start taking back those licences.

Some automobile garages got licences to produce hand sanitizers. Normally, if you compare a garage to a pharmaceutical plant, there should be some differences in the quality. I'm not saying everyone is doing it wrong, but for sure the level of quality will be different.

[Matthew Green, NDP, Hamilton Centre, ON]

That's a very important point.

Of course, you'll probably recall the controversy around the defective N95 masks. We brought in 11 million of them and had to basically declassify nine million of those masks—80%.

You list N95s that are produced by 3M. Did you have any contracts with the government for those items prior to this?

[Jean-Philippe Gentès]

No. We don't have any contracts for medical devices with the government. Our contracts are mainly for pharmaceutical ingredients that we have with various hospitals.

I would guess, though, that Mr. Philip does have contracts with the government.

[Matthew Green, NDP, Hamilton Centre, ON]

Mr. Philip. Yes, that's right. You're Galenova. My apologies.

Mr. Philip.

[Ernie Philip]

We do have an N95 contract with some of the health authorities, yes.

[Matthew Green, NDP, Hamilton Centre, ON]

Did you have it prior to COVID?