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Top Ibuprofen maker rallies as China lockdown disrupts supply

[MUMBAI] IOL Chemicals and Pharmaceuticals Ltd, the world's biggest producer of ibuprofen, is set for its best month in more than two years as the prolonged shutdown of China's Hubei province boosts prices of the non-prescription painkiller.

The Ludhiana, India-based firm supplies about a third of the world's requirement of the drug, with 10 per cent coming from China's Hubei Biocause Pharmaceutical Co. Prices of ibuprofen have risen by US$3 per kilogram in the last few weeks to about US$18 and may hit US$20 if supplies from Hubei remain unavailable, said Vijay Kumar Garg, joint managing director at IOL.

"There will be a supply gap and we expect to benefit," Mr Garg said in a telephone interview.

He estimates IOL's revenue will rise about 25 per cent to 21 billion rupees (S$407 million) in the year through March 31, with exports contributing roughly a third. IOL, which counts top Indian drug makers Abbott India Ltd, Cipla Ltd, Dr Reddy's Laboratories Ltd among its clients, doesn't expect any changes to local prices of ibuprofen as it has long-term contracts with local companies.

IOL's shares have risen 43 per cent -- to 254.75 rupees -- in February and are headed for their best month since October 2017.

IOL has the capacity to manufacture 12,000 tons of ibuprofen each year at its factory in the northern Indian state of Punjab. The plant is currently running at 80 per cent production, Garg said.

China on Monday said the quarantine of Wuhan, the part of Hubei province which has been sealed off since Jan. 23, will continue.

"Frankly, we don't want to take undue advantage of the situation," Mr Garg said. "We expect a certain higher price but don't want to force people."

BLOOMBERG