India-based Cipla reopens Durban manufacturing site after vandalism

SOUTH AFRICA – Indian generic drug manufacturer Cipla has revealed that one of its plants in South Africa has reopened more than a month after it was vandalized during a period of civil unrest that claimed the lives of more than 300 and caused an estimated US$3.3 billion in economic losses.

The facility is in Durban, in KwaZula-Natal province. It was looted on July 13, with no injuries to its 500-plus employees. Press reports that the plant burned down were inaccurate, the company said.

Cipla said that to mitigate some of the supply disruptions, it leveraged other manufacturing resources in the country and used buffer stock at distribution sites, including for vital drugs such as antiviral HIV treatments.

The company employed five contractors to expedite clean-up of the plant, said Cipla South Africa CEO Paul Miller, who also praised “the indomitable spirit” of his staff, which allowed for the factory’s quick recovery.

Last month, shortly after the violence erupted in South Africa, Cipla said it had begun to produce Gilead’s remdesivir for the treatment of hospitalized COVID-19 patients.

Gilead had licensed the production of remdesivir to nine generic manufacturers including seven in India for distribution to 127 low- and middle-income countries. But in April of this year, India banned export of the drug to help the nation deal with its crippling coronavirus surge.  

Cipla also has manufacturing facilities in Johannesburg, South Africa, and Uganda.

Cipla exhibiting ill financial health

The company is yet to publish its financial results for the year ended March 2021. In the previous year, Cipla recorded a Shs36bn loss compared to a profit of Shs7bn recorded in the previous year as additional impairment allowance, drop in gross margins and increase in interest on overdraft took a toll on the company.

The company’s impairment allowance on the financial assets increased by Shs3bn to Shs32billion due to delayed payment for drugs supplied to the Zambian government.

The company’s gross profit reduced from Shs53.48bn to Shs 36.94bn during the same period under review due to change in product mix in the new orders received after suspension of sales to Zambia and increase in orders from international health organizations as well as increased competition in some of the product ranges, which in turn, placed pressure on pricing to remain competitive.

Nevertheless, local drug sales increased by 18% during the period due to increased orders from international health organizations for delivery within the country as cash flows from operations increased from a deficit of Shs49bn to Shs23billion as a result of improved collections.

Cipla started its operations in 2005 as a joint venture between Quality Chemical Limited (QCL), a Ugandan company dealing in the importation and distribution of pharmaceutical drugs, and Cipla Ltd, a leading Indian pharmaceutical company specializing in manufacturing anti-retroviral drugs (ARVs) and Artemisinin-based Combination Therapies (ACTs) to combat HIV/Aids and malaria respectively.

Since then, the firm has initiated multiple capacity expansion programs and portfolio expansions, including the launch of new therapies.

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