#CNBCTV18Clutterbreakers | #Ibuprofen, the common painkiller has seen a slump in demand in last 2 years. The demand was hit during COVID-19, especially in regulated markets. So, where do things stand? Ekta Batra explains
Well ibuprofen the common painkiller has seen a slump in demand in the past two years and the market is still recovering pure play api company solara active’s pharma stock has corrected over 70 percent from its 52-week high now one of the major reasons for the correction has been weak numbers which was impacted by sales of the api used to manufacture the pain killer
Drug ibuprofen solara has one of the largest ibuprofen manufacturing facilities in the world it supplies to regulated markets with customers going back 10 to 15 years the company was on its way to commission its new facility in visak which would nearly double its capacity for ibuprofen along with backward integration plans that is to produce the raw materials this
Would make solara one of the two players with scale and integration for ibuprofen however 22 saw the company’s ibuprofen business uh hit by headwinds such as price pressure pressure as well as low demand so much so that it decided not to use the visa facility for ibuprofen but make it a multi-product facility the ibuprofen market was estimated to be growing six
To eight percent year on year as of feb 2021 however demand for ibuprofen was hit especially during covet 19 in regulated markets the reason for the demand being hit were fewer people were falling sick as more people stayed indoors and interestingly there was conflicting claims and reports indicating that paracetamol which is another type of painkiller was a safer
Drug to use than ibuprofen for covet 19 patients what then happened was that demand was hit which resulted in inventories being built up for companies that either manufactured and or sold the final ibuprofen drug in the market that is uh there was a surplus of capacity of ibuprofen in the world solara which manufactures the api saw its volumes of ibuprofen decline
By 1200 metric tons in q3 of fi 22 and ibuprofen api prices which were once sold at around 16 to 18 fell to around 10 to 12 levels more so companies such as solara then faced a lethal combination of low demand of ibuprofen apis and rising pressure from input costs thereby impacting their margins input costs fell from uh actually rose from critical raw materials
To solvents such as ibb and sodium dichromate and logistics freight costs all of them saw a spike so where do things stand currently so lara’s q4 numbers improved quarter on quarter but it was still impacted by a weak ibuprofen demand in terms of global markets realization stood at around 12 dollars per kg versus 16 dollars in f521 however companies have indicated
That their order book for ibuprofen is much better than it was in the past two to three quarters with inquiries now rising solara is confident of demand recovery in regulated markets lastly the street will watch out for a recovery of realizations to earlier prices and finally stabilization in input costs as well especially in the wake of the recent geopolitical
Tensions and rising over 19 cases in china
Transcribed from video
Ibuprofen Warning Demand By CNBC-TV18
