Companies stare at huge losses as unsold Covid drugs pile up

Mumbai, May 2, 2022:

During the two years of the pandemic, there were sky-rocketing sales of Covid-19 portfolio of drugs, sometimes even severe shortages. But now the industry is saddled with a huge inventory of raw materials and medicines used in Covid-19, and staring at potential losses and write-offs running into hundreds of crores.

Drug companies have huge stocks of Covid-19 drugs including antivirals -- Favipiravir, Molnupiravir and Remdesivir, and others like tocilizumab, due to multiple reasons including a demand mismatch. A huge inventory of raw materials and unsold stocks of steeply-priced finished formulations like Remdesivir and Tocilizumab, estimated around Rs 1,000-1,200 crore could impact profitability of companies, experts told TOI.

Although the exact size of the inventory and extent of exposure is unavailable, companies may need to take one-time write offs over the next few quarters, they added.

Overall, the Covid-19 portfolio witnessed a poor offtake in the third wave in the wake of milder infections and a lesser caseload as against the previous waves earlier this year.

Amongst the antivirals, those companies which have substantial stocks of Molnupiravir and Remdesivir could be hit the hardest. Companies with a sizeable exposure to Molnupiravir include Hyderabad-based Hetero, followed by Natco, Mankind Pharma and Sun Pharma, while for Roche Pharma’s tocilizumab, it is Cipla.

Glenmark Pharma, which launched antiviral pill Favipiravir in 2020, invested in huge quantities of the drug, while for Remdesivir, it includes Zydus, Dr Reddy’s, Cipla, Hetero, Mylan, Jubilant and Hetero. Anticipating a huge demand due to the rising caseload of the third wave, several drug companies manufactured as well as stockpiled substantial quantities. Further, companies also procured raw materials and key ingredients required for these drugs. “Covid-19 has been kind of a gamble (for manufacturers) as the direction of therapy and mutations have been ever evolving. There was substantial capacity created for multiple drugs, which firmss may write off now,” an industry expert said

“We have asked the government to maintain a stock-pile of essential Covid-19 medicines,” he added.

Further, stocks of drugs like vitamins and supplements like Vitamin C and Zincovit which had shown a huge uptick during Covid, will take six to eight months to be liquidated over the year.

Some states such as Karnataka and Rajasthan cancelled the orders, adding to the woes of small and mid-size players.

Antivirals like Molnupiravir initially believed to be a game changer did not take off like the previously launched Covid-19 drugs due to serious safety concerns. ET Health