Pakistan: Ferozsons in talks with Gilead to produce Covid-19 drug Remdesivir

  • US Food and Drug Administration (FDA) recently authorised the use of Gilead's Remdesivir for treating coronavirus
  • Positive for Ferozsons (FEROZ PA), but limited by non-exclusivity, affordability and export potential
  • Since the license is not exclusive, Searle could be another potential local producer and competitor
Pakistan: Ferozsons in talks with Gilead to produce Covid-19 drug Remdesivir

BF Biosciences limited, a subsidiary of Ferozsons Laboratories (FEROZ PA), is in talks with Gilead Sciences to manufacture and supply Remdesivir, a drug approved by the FDA to tread Covid-19 patients in critical condition, to Pakistan and 126 other countries. Although this is a positive development for Ferozsons given the rising Covid-19 cases in Pakistan, the non-exclusivity of the agreement, affordability and limited export potential could reduce the overall potential of this deal.

Covid-19 cases in Pakistan are rising sharply. There are 30,941 total confirmed cases in Pakistan, ranked 19th worldwide. The growth rate is quite sharp (10,000 cases in the past 7 days versus 7,026 in the preceding 7 days). Out of this, 111 cases (or 0.4%) are currently in critical condition. The WHO has warned that total cases in Pakistan could rise to 200,000 by mid-July even as the lockdown has been relaxed significantly since Saturday.

Ferozsons (via subsidiary BF Biosciences) in negotiations with Gilead for Remdesivir production licence. Remdesivir is a broad-spectrum antiviral drug originally developed to treat Ebola by Gilead, which was approved by the FDA for emergency use on critically ill Covid-19 patients. 

With the licence non-exclusive, Searle could be another potential candidate. According to a notice from the company, Ferozsons is negotiating a non-exclusive licence agreement with Gilead. If there is enough demand for the drug, we think pharmaceutical company Searle could also step up as a producer with its production facilities in the south versus Ferozsons' plant in the north. The non-exclusivity clause of the licence already limits potential volume/profits for Ferozsons. Take the example of Sovaldi (a drug used to treat Hepatitis) – Ferozsons had an exclusive licence from Gilead to manufacture and sell the drug, which led to profits jumping by 137% yoy in 2016. However, the following year Ferozsons' net profit dropped by 82% yoy as other companies also received the license to produce the same drug. 

Export potential is limited. As per the notice, Ferozsons can export the drug to 126 countries, but we think that exports volume would not be significant as: (i) exports are currently very minimal (3% of total sales in FY 18-19); and (ii) Gilead is in talks with several manufacturers across North America, Europe and Asia for the production of this drug while Beximco Pharmaceuticals in Bangladesh is expected to start production of Remdesivir this month. 

Pricing is yet to be determined, but a regional peer indicates it could be as high as US$781 per patient. Beximco Pharamecutical in Bangladesh plans to price the drug between US$59-71 per vial, which means the total cost per patient could be anywhere between US$295 to US$781 depending on the severity of the case. This will be in addition to ICU/ventilator cost of atleast US$300 per day. The Institute for Clinical and Economic Review (ICER), which assesses the effectiveness of drugs to determine appropriate prices, put the cost of producing a 10-day course of Remdesivir at US$10, but suggested the price could rise to $4,500 based on benefits shown in clinical trials. The price range seems high for Pakistan where the per-capita income is only cUS$1,400. Having said that, we do expect the prices to be cheaper in South Asia compared to developed countries and could also be subsidised by the government, but affordability would still be a concern, nonetheless. 

Production timeline is still uncertain. There are several steps needed to start the production of Remdesivir which include: (i) the execution of a formal agreement with Gilead; (ii) procuring APIs; and (iii) securing local regulatory approvals from the Drug Regulatory Authority of Pakistan (DRAP). However, given that the FDA has approved the drug and the urgency of the current situation, we do not expect significant delays in approval by DRAP. 


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