With financial results for the quarter round the corner, small- and medium-sized, export-oriented pharmaceutical companies are expecting a 5-10 per cent decline in their bottom line for the April-June period, owing to the rupee appreciation.
The impact will be minimal on the larger companies such as Ranbaxy, Sun and Wockhardt, as they are fully hedged against the net exposure of the rupee in the international markets.
"The effect of rupee appreciation will be severe on companies, which are primarily export-oriented. Any pharma or contract manufacturing firm, whose 60-70 per cent revenues come from foreign markets, will find its bottom line affected by around 10-12 per cent. The companies are unable to compensate for the losses due to the long-term contracts," Venkat Jasti, managing director, Suven Life Sciences, said.
Suven, a major Contract Research and Manufacturing Services player, has most of its revenues from foreign contracts. However, major players are unfazed. "We have 10 production facilities outside the country that serve as automatic hedging towards rupee-dollar transactions," a Ranbaxy spokesman said.
Suven, a major Contract Research and Manufacturing Services player, has most of its revenues from foreign contracts. However, major players are unfazed. "We have 10 production facilities outside the country that serve as automatic hedging towards rupee-dollar transactions," a Ranbaxy spokesman said.
Sun Pharma also expects a minimal impact due to rupee appreciation. "Over 40 per cent of our revenues come from international business and we were a net exporter by Rs 200 crore (Rs 2 billion)
last year. We are also a foreign currency borrower, thereby expecting a positive impact." a Sun Pharma spokesperson said.s="clear">
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