The Global Fund stops sourcing anti-malaria drugs from Ipca

Move follows USFDA warning letter to three of Mumbai-based drug maker's plants; stock sheds 10%

The Global Fund, a Geneva-based public partnership organisation, has discontinued sourcing of anti-malaria drugs (Artemisinin based Combination Therapy, or ACTs) from Ipca Laboratories in the light of the US Food and Drug Administration (FDA)’s warning letter to the drug maker’s three plants.

The move is a setback to Ipca Laboratories, a domestic market leader in anti-malaria segment. Anti-malaria drugs accounted for 24 per cent of the company’s formulation exports, worth around Rs 300 crore, in FY15. The segment's share in exports, however, declined over the previous year. Africa is its main export market for these drugs. Following the announcement, the company’s shares fell 10 per cent to close at Rs 499.30 apiece on Friday.

In a notification to stock exchanges, Ipca said The Global Fund took the step following re-assessment of the situation and a risk consideration exercise. The Switzerland-based organisation would now source ACTs from other pre-qualified suppliers that have no outstanding issues with the regulators, Ipca Laboratories said.

In its note to investors, Edelweiss Securities said The Global Fund accounts for about 70 per cent of Ipca’s total institutional business in Africa.

It said the Ipca management had indicated that the remediation measures at its plants would be completed within six months and that Global Fund shipments would resume soon. “This development effectively derails Ipca’s business revival once again.”

In February, the company had received warning letters from FDA for its manufacturing units in Madhya Pradesh and Silvassa. The alerts were issued following FDA inspections in 2014 and 2015.

AT STAKE

• The Global Fund is a public-private initiative to combat diseases such as AIDS, tuberculosis and malaria
   
• It raises and invests nearly $4 billion a year to support programmes run by local experts in countries and communities most in need
   
• Has decided not to source anti- malaria drugs from Ipca Laboratories because of USFDA warning letter to its plant
   
• Anti-malaria drugs is a big focus area for Ipca Laboratories. It is a market leader in the segment in India