Maker of Trump’s Unproven Virus Cure Boosting Capacity 10 Times

The world’s largest maker of an anti-malarial drug that U.S. President Donald Trump has touted as a “game changer” in the treatment of the deadly coronavirus plans to boost capacity more than ten-fold to meet surging global demand.

Cadila Healthcare Ltd. will increase production of hydroxychloroquine sulphate to as much as 35 tons, or about 200 million individual doses per month, from about 3 tons per month currently, according to Sharvil Patel, the Ahmedabad-based company’s managing director.

“We are scaling up,” Patel said in a telephone interview Tuesday. “We could do more, but currently this is our planning.”

Though there is no conclusive scientific evidence that the drug can treat the infection from the novel pathogen, U.S. hospitals and consumers have begun stockpiling the drug after reports of its efficacy in some small clinical studies -- but not in others -- began circulating online and in the media. Trump last week vowed to make the medication widely available to fight the pandemic which has sickened over 387,000 people globally, killed 16,700, and has no approved cure or vaccine.

To meet the surging demand, Cadila plans to add two new production lines to the existing facility that makes the drug’s main chemical ingredient. It’s also roping in two more factories to help manufacture the finished tablets, according to Patel.

Drug Rush

The rush to make this cheap and decades-old medicine easily accessible led the U.S. drug regulator to lift import restrictions on three plants of another Indian pharmaceutical company, Ipca Laboratories Ltd., on March 20.

These facilities were under an import alert since 2015, after inspectors discovered multiple violations, including “systemic data manipulation.”

“We are noticing an increase in the emergency demand and enquiries for” hydroxychloroquine and related drug chloroquine from several countries, Ipca said in a March 21 filing, adding that it “is gearing to manufacture and supply these products.”

Another Indian pharma company, Natco Pharma Ltd., which through its marketing partner Rising Pharmaceuticals Inc. is the largest U.S. supplier of chloroquine, is also ramping up production and should be at scale by the end of next month, a company spokesman said by email. He declined to say how much the company plans to produce.

Prophylactic Use

In India, the government has recommended hydroxychloroquine as a prophylactic for health care workers who dose themselves as a preventive measure to avoid contracting the infection while treating Covid-19 patients.

The drug is currently being snapped up by U.S. medical systems at more than twice the typical pace.

The global market for these two chloroquine drugs in 2019, before the virus hit, was about $558 million, according to data from IQVIA MIDAS. The U.S. sales made up roughly 40% of the overall market.

By the end of April, Cadila Healthcare expects to scale up monthly production to 20 tons of hydroxychloroquine and then to 35 tons by June.

Input Costs

Cadila will be prioritizing orders from governments and institutional health care providers and does not expect to make profit from the scaled up sales of this drug, Patel said, even though input costs have doubled.

“The way we are supplying we will probably lose some money or at best break even,” he said. “We are just making sure we stay above water.”

Cadila sold about $356.2 million worth of hydroxychloroquine in the U.S. last year, accounting for almost 40% of total sales there, according to data from Symphony Health.

Increasing production to about 20 tons a month could cause a percentage increase in “the mid-teens” to Cadila’s revenue by next year if the drug is widely adopted to treat Covid-19, according to a research note by Kunal Dhamesha, analyst at local brokerage SBI Capital Markets.

If the drug also becomes recommended for prophylactic use among the general population, Dhamesha wrote, that “can expand the market to virtually 7 billion people.”

--With assistance from Bibhudatta Pradhan.

To contact the reporters on this story:
Ari Altstedter in Mumbai at aaltstedter@bloomberg.net;
Dhwani Pandya in Mumbai at dpandya11@bloomberg.net

To contact the editors responsible for this story:
Rachel Chang at wchang98@bloomberg.net

Bhuma Shrivastava

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