Hit by rupee appreciation, domestic pharma players including Ranbaxy Laboratories, Biocon, and Dabur Pharma have started taking measures like hedging, shifting from dollar billing to other currencies, and introducing revaluation clause in their contracts. The efforts assume significance as the US is the biggest export market for Indian drug makers.
A sharp hike in the value of the rupee that has climbed about 12% as compared to the US dollar since 2007 beginning is impacting overseas revenue of drug makers. The rupee appreciation from Rs 46 earlier in the year to the current level of Rs 39.50, on an average, has shaved off 10% from the export revenues of many pharma companies.
?We are taking various measures including hedging and conversion of payments from dollar to other currencies like Euro,? chairman and managing director Kiran Mazumdar Shaw told FE. Biocon earns 60% of its revenue from export of biopharmaceuticals and offering contract research services to various pharma companies. Shaw, however, did not specify as to what percentage of company?s income would be in dollars as compared to other currencies. ?It has to be a mix of currencies.?
Ranbaxy Laboratories, which also benefits from the foreign currency convertible bonds worth $400 million it had raised last year, is also taking both short and long-term risk management measures to mitigate the impact of rising rupee. Around 80% of company?s revenues come from its overseas business.
?It is a constant process to take into account the movement of rupee and take appropriate measures. We also have an advantage of currency diversification as the company enjoys a healthy share in geographies other than the US,? chief executive officer and managing director Ranbaxy Malvinder Mohan Singh said.
Chief executive officer at Dabur Pharma, Ajay Vij said the company has already taken steps to reduce the impact of rising rupee.