Coronavirus impact: Ipca, Cadila Healthcare stocks gain on India's HCQ move

Given the unprecedented demand for the ‘wonder drug’, manufacturers say the chronic rheumatoid arthritis patients who take HCQ daily may find it difficult to source it now. HCQ is used to treat auto-immune disorders like rheumatoid arthritis, lupus,
India’s move to allow the export of hydroxychloroquine (HCQ), touted as a “wonder drug” for treating Covid-19, did wonders for the stock prices of the two largest manufacturers in the world — Ipca Laboratories and Cadila Healthcare — on Tuesday.

Following pressure from US President Donald Trump, lifting the ban on exports of this drug was expected to be only a matter of time. India’s Ministry of External Affairs (MEA) said on Tuesday that both HCQ and paracetamol (a common pain and fever drug) would be kept in the licensed category and their demand position would be continuously monitored.

“However, the stock position could allow our companies to meet the export commitments that they had contracted,” the MEA said.
Stocks of Ipca Laboratories, the global leader for making HCQ and chloroquine, touched a 52-week high on Tuesday (Rs 1,649 a piece). It ended the day’s trade up 12 per cent on the BSE. The stock price of the other major manufacturer, Cadila Healthcare, shot up 13.6 per cent. The Nifty Pharma Index gained 10.4 per cent on the day, outperforming Nifty’s 8.8 per cent gain.

Both firms are in the process of supplying 100 million tablets to the Indian government this month. Global orders, too, are pouring in. The companies, however, remained tight-lipped on their export commitments. Cadila supplies to the US market, while US Food and Drug Administration lifted import alert on Ipca’s plants to allow it to export during this crisis.

It is learnt that apart from the US, Brazil and Sweden have also requested for the drug to battle Covid-19 in their countries. SAARC countries too are in the fray.

India said that in view of the humanitarian aspects of the pandemic, it decided that it would licence paracetamol and HCQ in appropriate quantities to its neighbouring countries that are dependent on its capabilities. “We will also be supplying these essential drugs to some nations who have been particularly badly affected. We would therefore discourage any speculation in this regard or any attempts to politicise the matter,” the MEA spokesperson said.

Trump had said he would be surprised if India did not allow the export of HCQ tablets despite a request made to New Delhi.
Sources revealed that Ipca can make 1 billion tablets of HCQ easily per month and that would be enough to take care of both domestic and international the demand. Each patient requires a 14-tablet course approximately. India now has around 5,000 patients, but the numbers are expected to rise.

“The companies have said that they can supply 100 million tablets to us within April. We want to keep some buffer stock ready in India and thus the government has decided to procure. Meanwhile, if there is sufficient raw material available, these companies who have export orders can supply to the countries in need,” said a government official.

He said the Centre would closely monitor the situation (of raw material stock, production and exports of HCQ) and take a call on a case-to-case basis.

Meanwhile, manufacturers noted that there were difficulties on the ground related to movement of raw material, finished goods both within the country and outside. “Many countries have said they would air-lift the stock once we are ready,” said a senior official of a drug firm that makes HCQ. He added that the demand would reduce if HCQ is not found to be effective for Covid-19 patients.

Given the unprecedented demand for the drug, manufacturers say chronic rheumatoid arthritis patients who take HCQ daily could find it difficult to source it. HCQ is used to treat auto-immune disorders like rheumatoid arthritis, lupus and also in some diabetes cases.

“Another big trouble that is brewing now is that the rheumatoid arthritis patients who use HCQ may find it difficult to source it. The drug is sold over the counter (OTC) in the US. It is not sold OTC here. Since people are panic buying this inexpensive medicine as a prevention against coronavirus, supplies to regular users may get limited,” the official said. Till the time of going to press, the Director General of Foreign Trade had not issued a formal notification in this regard.

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