The development comes at a time when Ipca is already seeing strong growth led by its domestic business and complimented by exports (branded, generics and institutional business), despite US supplies remaining constrained. The drug maker’s pain management range continues to do well in India (country accounts for 43 per cent of revenue) and had grown 15 per cent in December quarter, ahead of the pharma market growth of 9-10 per cent. Formulation exports (about third of revenue), too, had grown 26 per cent year-on-year. Ipca, which sees institutional sales at Rs 175-180 crore this year, expects it to rise to Rs 250 crore in FY21. Analysts at Motilal Oswal Financial Services had been factoring in 20 per cent earnings growth in FY21. But now, the growth may be higher in light of the fresh opportunities. “This (anti-malaria) offers a significant opportunity for Ipca, which otherwise had a minimal presence in USA,” says Ranvir Singh of Sunidhi Securities.
The street, however, is awaiting the orders to gauge the quantum of upside from chloroquine and hydroxychloroquine ramp-up in the US. The US FDA
lifting import alert partially means that some large orders may be underway, say analysts. “Ipca has recently witnessed increase in emergency demand and enquiries for APls and its formulations from US FDA
as well as several countries,” say analysts at Axis Capital who see the latest developments as a near-term supply opportunity.
Meanwhile, though Ipca as the largest supplier of anti-malarial drug stands to gain, there are other players who would also benefit.
A municipal corporation worker sprays disinfectant inside a bank as a preventive measure to contain the spread of coronavirus
in Vijayawada. Photo: PTI
Amongst suppliers of hydroxychloroquine to the US include Prasco, Teva, Sandoz, Sun Pharma and Dr Reddy’s Labs and Cadila Healthcare. The key challenge will be availability of important starting materials for some players, but Ipca also has its own ingredient manufacturing, says an analyst at a foreign brokerage.
Chloroquine, on the other hand, has few suppliers such as Natco Pharma (partnered with Rising), Ipca and Amneal. Currently, only Natco has been supplying the drug. With the import alert lifted, Ipca will also be able to supply and benefit.
Among others, Cipla and Torrent Pharma, which also have anti-malaria drugs, may benefit. Since antibiotic drug, azithromycin is also racing ahead among available treatment for Covid-19, it opens opportunities for players such as Alembic Pharma, which has approvals in the US and is amongst the largest producer of this drug.