Indies Pharma taking stock of heavy COVID-19 hit • Breakdown of supply chain system headlines negative impact

Indies Pharma taking stock of heavy COVID-19 hit • Breakdown of supply chain system headlines negative impact

• Breakdown of supply chain system headlines negative impact

BY DURRANT PATE
Observer Business writer

Sunday, November 22, 2020

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Indies Pharma, Jamaica's sole listed pharmaceutical company has taken a heavy hit on its operations by the impact of the COVID-19 pandemic.

So heavy was the COVID-19 hit on operations that the Montego Bay-based company felt the need to issue an advisory, detailing the extent of the impact on its operations to the Jamaica Stock Exchange (JSE), where its stocks are traded.

In the advisory, Indies Pharma told the JSE that “although it appeared we were surviving the negative impact in the initial stages, it [pandemic] did affect us to a certain level, mainly due to the disruption in supply chain and therefore the stock levels. Also to an extent we were negatively impacted on the Jamaican market front due to the limitations applied to our delivery schedules and limited number of working days since our entire staff was allowed to work alternate days to maintain the social distancing and reduce the exposure during the routine working hours”.

Indies Pharma emphasised that a reasonable estimate of the impact cannot be made at this time.

MITIGATE AND MOVING FORWARD

However, “we have been monitoring the situation regularly and have successfully implemented contingency plans to meet the challenges ahead of time so that we will continue to emerge successfully, as we mitigate and move forward with the pandemic at the forefront,” Indies Pharma stated in its advisory yesterday to the JSE.

With the reopening of the ports and cargo supply channels, Indies Pharma reports that it is now at an advanced stage of planning production and supply chain channels so that the company can remain self-sufficient and positively productive during its new fiscal year that just started on November 1, 2020.

Indies Pharma also told the JSE, “We hereby take this opportunity to notify to your esteemed authority that the spread of the novel coronavirus disease (COVID-19), declared a global pandemic by the World Health Organization on March 11, 2020, appears to have impacted our revenue streams negatively.”

AMERICAN EXPANSION GOING WELL

In a recent interview with Caribbean Business Report, Indies Pharma Chief Executive Officer Dr Guna Muppuri advised that the company's American expansion is going well. Indies Pharma is seeking to tap into the American pharmaceutical market that earned some US$490 billion in 2019.

Indies Pharma's American expansion is being financed by the $805 million raised on the local capital market through a successful private placement earlier this year. The private placement was arranged by Sagicor Investments Limited.

Approximately $405 million of the bond proceeds is being invested in the development of two generic drugs and their submission for approval by the United States Food and Drug Administration. The development of the two drugs will give the company access to the US market through the growing demand for generic drugs.

FINANCIAL PERFORMANCE

For the nine months ended July 31, 2020, Indies Pharma Jamaica achieved revenues of $565.83 million, down 1.7 per cent or $9.98 million over the corresponding period in 2019. This outcome resulted from the delays encountered in shipments due to COVID-19.

These delays led to a number of pharmaceutical items running out of stock. Though revenue was down, Indies Pharma managed to achieve growth and profitability for the nine-month review period.

Gross profit went up 2.7 per cent or $10.369 million, while net profit jumped 34.9 per cent or $41.23 million. Administrative and other expenses decreased by $29.693 million compared to the same period in the prior year.

This was mainly due to the decline in rent, vehicle expenses, information technology, security and the lack of one-off expenses such as interest penalty. Liabilities increased by $498.280 million, representing a whopping 754 per cent increase.

This jump in liabilities was predominantly due to loan for the purchase of land, which will be used for the construction of Indies Pharma Corporate Office as well as the company's adoption of IFRS 16 'leases' which requires the lessee to record a liability for the remaining contractual life of the lease payments.


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