Shares of Cadila Healthcare ended marginally lower on Monday, with market players attributing the weakness to the US Food and Drug Administration's warning against the use of anti-malarial drugs chloroquine and hydroxychloroquine for the treatment of COVID-19. The stock closed about 1 percent lower at Rs 334 on a day when the Sensex and Nifty rose around 1 percent each.
Shares of IPCA Laboratories, also a potential beneficiary of the demand for HCQ, however, rose over 3 percent to close at Rs 1670. The stock rebounded after falling 5 percent to the day's low of Rs 1535.
The USFDA last Friday said that the drug should be used only in a hospital setting or in clinical trial and warned against side effects, including potential fatal heart problems. The guideline is a reiteration of the FDA’s earlier approval for emergency use of the drug on a limited basis.
The warnings against HCQ seem to have come as a setback to Cadila Healthcare and Ipca Laboratories, which are among the largest manufacturers of HCQ. Shares of both Cadila and Ipca stocks have gained more than 30 percent of late in anticipation of a boost to earnings from sale of HCQ.
According to the brokerage firm Jefferies, Cadila has 30 percent market share and around 3 percent of its US sales comes from HCQ. Ipca, on the other hand, is one of the largest suppliers of HCQ globally. In fact, the USFDA a few weeks ago allowed Ipca to supply HCQ from their facilities which was banned for export to the US since 2015. Besides Cadila and Ipca, the other key suppliers of HCQ include Sun Pharma and Dr Reddys from India and Prasco, Teva and Sandoz among global players, according to Jefferies.
Cadila and Ipca have received order to supply 10 crore tablets to the Indian government, but opportunities might slow down for the drugmakers, according to experts.
The supply of the drug is not an issue, say experts. Global pharma giants such as Bayer, Mylan, Teva and Sanofi have pledged to donate millions of doses of the drug. However, Jefferies pointed out that unless the drug is used as a preventive against COVID-19 or countries and hospitals don’t continue to stock up they do not expect it to be a big opportunity for pharmaceutical firms.
Besides the FDA’s warning, clinical data seems to be stacking up against hydroxychloroquine, or HCQQ. The latest study was carried out in the US on a group of 368 male veterans hospitalized due to COVID-19. The analysis found that while 11 percent of veterans with COVID-19 who received standard care died, the percentage of deaths rose to 28 percent when they were also given HCQ.
The US study comes after 11 COVID-19 patients in Brazil died within a week of being administered higher chloroquine doses. The practice was halted early due to concerns of side effects, including irregular heartbeats and the death of patients.
Further, a doctor at the forefront of fighting COVID-19 in Mumbai’s Dharavi area said that the plan to prescribe HCQ on a mass scale has been shelved due to potential health risks.
According to experts, the warning against HCQ essentially implies that the drug is unlikely to be used on a large scale as a cure or prevention unless clinical trials prove its effectiveness. HCQ was approved by the Indian Council of Medical Research (ICMR) to be as a prophylactic for healthcare workers and those exposed to COVID-19 patients.