Impact on Indian Pharma Industry
Following an invasion of Russia on Ukraine, Indian pharma industry is facing a far more difficult situation ahead with global uncertainty both in the short and long run.
India is facing a difficult situation since the war is directly and indirectly involving many countries.
War is having immediate consequences for global trade which emerges from the international situation. Exports and imports are undergoing ramifications and the existing supply aggravates.
Consequences on Pharma Industry
Pharmaceutical products constitute one of the main exports from India to Ukraine. India is in fact the third-largest exporter of pharmaceuticals to Ukraine.
According to Pharmaceuticals Export Promotion Council of India, India exported over $181 million worth of pharmaceutical goods to Ukraine in FY21, nearly 44 per cent growth over the previous year, while Russia contributed nearly $591 million last fiscal with a growth of 6.95 per cent in comparison to the previous year Pharmaceuticals are bearing the brunt.
Russia and Ukraine are very important export markets from a pharma perspective. Some Indian pharma companies have a very strong presence in those regions.
The ongoing conflict between Russia and Ukraine has had a significant impact on the Indian pharma industry.
India is the third-largest exporter of pharmaceuticals to Ukraine, and the war has disrupted global trade, resulting in higher manufacturing and transportation costs, inflation and disruption of trade payment issues.
Several Indian pharma companies, including Dr Reddy’s Laboratories, Sun Pharma and Glenmark Pharmaceuticals, have a significant presence in Russia and Ukraine, making them vulnerable to declining trade and payments.
Sanctions imposed by the US have also affected trade payments from Russia. The long-term consequences of the conflict are likely to disrupt the world economy and have a significant impact on the Indian pharmaceutical industry.
Sanctions against Russian banks is worrisome as it is affecting the trade payment issues from that country. Pharma company find it hard to do any business there.
Pharma industry also depends on other commodities like crude oil and natural gas which directly impact transportation costs making Indian exports costly.
Soya and sunflower oil supplies will also be affected. Hike in crude oil will lead to further inflation in petrol and diesel prices, which will lead to overall inflation.
The manufacturing and transportation cost of the goods are becoming more costly. Freight for goods, oil, grains and coal have increased which in turn have grapple the industry.
These are having long-term consequences and is disrupting the world economy. This impact is neutralizing the efforts taken to recover India’s domestic trade from the Covid-19 pandemic.
The prices of all the active pharmaceutical ingredients (API) had seen a sharp rise due to the stocking up of the ingredients by various importers and exporters across the country. It had again cause a great impact on the pharma industry.
The conflict between Russia and Ukraine is hitting the Indian economy and the pharma trade to a significant extent.