Shyamal Das, a senior lecturer in pharmaceutical science, started making the sanitiser three days before the lockdown began.
He said he initially made 20 litres for the university's School of Pharmacy but he soon found himself supplying the entire university and giving the surplus to essential services in Dunedin such as police and Fire and Emergency.
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"There was a big shortage of hand sanitiser in the market. I noticed that we cannot find anything in Dunedin so I decided to prepare it by ourselves," he said.
"My initial plan was to make 20 litres for the school and my students and my colleagues but ultimately the university wanted - and before the lockdown we prepared - more than 100 litres with my students," he said.
"Now we are preparing even more and more, I can tell more than 600 litres already prepared."
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Das said hand sanitiser was relatively easy to make with the right setup, but without specialist equipment it was time-consuming to prepare.
He said the group at Otago was using the World Health Organisation formula for hand sanitiser.
He was getting requests every day from different parts of the country for the sanitiser, but unfortunately the Otago group had reached its limit and was starting to run out of the ingredients, he said.
"Our capacity for producing is now at the limit."
Das said he hoped that other organisations could start producing hand sanitiser to help meet demand.