IOL Chemicals expects positive impact of Ibuprofen price hike

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IOL Chemicals is on the radar after the National Pharmaceutical Pricing Authority (NPPA) recently allowed a one-time price increase of 50 percent for three drugs, including Ibuprofen. Ibuprofen is 56 percent of IOL Chemicals’ active pharmaceutical ingredients (APIs) production. To discuss the impact of this move and the business outlook, CNBC-TV18 spoke to Sanjay Chaturvedi, CEO of IOL Chemicals & Pharmaceuticals.

IOL Chemicals is on the radar after the National Pharmaceutical Pricing Authority (NPPA) recently allowed a one-time price increase of 50 percent for three drugs, including Ibuprofen.
Ibuprofen is 56 percent of IOL Chemicals’ active pharmaceutical ingredients (APIs) production. To discuss the impact of this move and the business outlook, CNBC-TV18 spoke to Sanjay Chaturvedi, CEO of IOL Chemicals & Pharmaceuticals.
Chaturvedi said, “It is not uncommon for prices to be revised and typically it takes at least two quarters for this to have a meaningful impact and reflect on your P&L. We think there will be positive impact on IOL. What remains to be seen is that when these prices get revised, how much of the value gets captured by API players and how much of it is captured by the formulation players. But clearly, we do expect a positive impact for this and that should reflect in about two quarters or so.”
On impact of price increase, he said, “Assuming the pricing is constant, what this will do is certainly boost demand. So, the volumes will go up. It is a very dynamic market place so your guess is as good as mine as to what the volume impact will really be.”
On FY22 trend, Chaturvedi said, “On an average, the total asset utilisation for Ibuprofen will be in that range. We did see a bottoming out of demand in first quarter of this year. We do expect robust growth, going forward, certainly from the next quarter onwards. We do expect volumes to pick up.”
On chemical segments, he said, “The most important product in our portfolio for the chemical sector is Ethyl Acetate and that has certainly done well for us. What worked well particularly for us was our enhanced capacity. So we do expect it to have a positive impact on topline and bottom-line. What has worked well for our chemical segment is the portfolio of products that we have and the fact that we added capacity at the right time.”
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