Weakening ₹ may not be shot in the arm for pharma exporters

The recent depreciation of the Indian rupee against the US dollar may not necessarily bode well for India's pharmaceutical exporters in the immediate term, experts said.

- SOHINI DAS

While some believe the devaluing rupee will have little immediate impact on exports due to annual contracts being hedged against currency fluctuations, others warn that smaller players may lower prices in response to the currency tailwind, potentially triggering price renegotiations. Exporters note the higher import costs for active pharmaceutical ingredients (APIs) could offset the gains from the export surge.

Last week, the rupee weakened against the US dollar, reaching a fresh closing low of 85.76.

Sudarshan Jain, director general of the Indian Pharmaceutical Alliance (IPA), said the annual contracts with US wholesalers are typically hedged against currency fluctuations.

The current rupee-dollar rates would likely not have an immediate impact.

However, Jain noted that if the local unit continues to weaken over a longer period, it could affect next year's contracts, though it is difficult to predict at this stage.

In 2023-24, India's pharmaceutical exports to the US accounted for 31 per cent of the total drug exports, amounting to $8.7 billion.

India's total pharmaceutical exports for the year were valued at $27.8 billion, marking a 9.6 per cent growth from the previous year.