Rapidly-spreading coronavirus has not only caused misery for thousands of victims, but big headaches for the pharmaceutical industry. Supplies of everyday drugs, including pain-reliever paracetamol, face a threat. China, especially Hubei province, the epicentre of the outbreak, is critical to the global pharmaceutical supply chain. Disruptions at Chinese and Indian drugmakers will lead to drug shortages worldwide.
Those are already starting to be felt. Since the outbreak, costs of mainstream antibiotics have risen 50 per cent for Indian drugmakers, the world’s biggest exporter of generic drugs. These companies, which produce a fifth of the world’s drugs, rely on China for more than two-thirds of their chemical inputs. Nearly all ingredients for many critical antibiotics and fever medications are sourced from China.
Markets have registered their concern. Share prices of Chinese drug makers Sino Biopharmaceutical, Shanghai Pharmaceutical and China Pharma have plunged in the past few weeks, with the latter down as much as 50 per cent. Indian producers such as Cipla, Aurobindo Pharma and Sun Pharma (with the most US market exposure), are down more than a tenth. In terms of financial staying power, should supply problems persist, Sino, Cipla and Aurobindo have low net debt relative to their cash earnings.