Analysts say U.S. drug regulator's decision to revoke authorisation to use anti-malarial drugs to treat Covid-19 patients in cases of emergency will impact Indian pharma companies in the short term but won't hurt earnings.
India is one of the largest suppliers of chloroquine and hydroxychloroquine to the U.S., with Cadila Healthcare Ltd. and Ipca Laboratories Ltd. being the largest exporters.
Brokerages Prabhudas Lilladher and Nirmal Bang Securities said the exports, allowed on humanitarian grounds, will be impacted.
“Other countries may likely to follow the guidelines as the U.S. FDA is leading standard globally in treating Covid-19 patients through multiple therapies,” Prabhudas Lilladher said in a note. The brokerage, however, said this a positive for profitability as the medicines were to be supplied at least profitability amid the pandemic.
It doesn't see any impact on the earnings for 2020-21 and 2021-22.
India had lifted the partial ban on exports of the two drugs after U.S. President Donald said there may be a retaliation. While the U.S. FDA had on March 28 allowed emergency use, Trump touted it as a potential treatment for Covid-19.
The FDA, however, revoked the permission June 15, citing new information, including clinical trial results, that led Biomedical Advanced Research and Development Authority to conclude that chloroquine and hydroxychloroquine may not be “effective” to treat Covid-19, according to its statement.
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The drug's potential “benefits for such use do not outweigh its known and potential risks”, it said. These risks include serious cardiac adverse events and several newly reported cases of methemoglobinemia.
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