Hydroxychloroquine drug useful in clinical trials for Covid-19 infection: Cadila Chairman

Hydroxychloroquine drug useful in clinical trials for Covid-19 infection: Cadila Chairman

Update on the Indian Equity Market:

After hitting the lower circuit in the first half of the day Nifty closed 13% lower at 7,610. Among the sectoral indices, NIFTY PVT Bank (-17.4%), NIFTY Bank (-16.2%), NIFTY Fin Services (-15.5%) closed lower. None of the sectors closed on a positive note. AXIS Bank (-27.6%), Bajaj Finserv (-27.5%), IndusInd Bank (-23.9%) closed lower. None of the NIFTY stocks closed on a positive note.

Excerpts from an interview of Mr Pankaj Patel, Chairman, Zydus Cadila with CNBC-TV18:

  • Anti-malaria drug Hydroxychloroquine has found to be useful in clinical trials of some patients with Covid-19 infection and Cadila is in a position to increase the production.
  • On Janta curfew, Mr Patel said that it is a unique idea and it will prepare everyone for a lockdown situation if any.
  • He said it is a positive step and with respect to clinical research being done, there are more than 10 drugs being tried out as a treatment for coronavirus infection.
  • A recent report by France researchers showed that hydroxychloroquine has found to be effective. So there is a possibility of use of it in the treatment of infection.
  • The company is closely watching this situation and is in a position to produce more as and when needed.
  • The manufacturing is dependent on local raw materials and there is no dependence on imported inputs so the company can supply this drug in sufficient quantity.
  • Speaking about Covid-19 impact on the company, Mr Patel said, the company does not see a challenge as the US supply will continue unless restrictions are imposed by the government. So there should not be any problem supplying drugs to the US and other markets.
  • As far as approvals are concerned, the process in on, not that for every drug approval there is an inspection necessary.
  • He added there will be some slowdown in the approval process as there is a slowdown and in the US people are working from home. However, it is not a major challenge.

Consensus Estimate: (Source: market screener website)

  • The closing price of Cadila was ₹ 281/- as of 23-March-2020.  It traded at 21.6x/ 17.5x/ 15.7x the consensus EPS estimate of ₹ 13/16/17.8 for FY20E/ FY21E/ FY22E respectively.
  • The consensus average target price for Cadila is ₹ 300/- which implies a PE multiple of 16.8x on FY22E EPS of ₹ 15.7/-.


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