The Hindu Business Line : Now, pharma exports facing recession blues http://www.blonnet.com/2009/03/04/stories/2009030452230500.

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Now, pharma exports facing recession blues

Forex losses, delayed payments.

G. Naga Sridhar

Hyderabad, March 3 The adverse impact of the recession has started showing on the pharma
industry with the value of exports in dollar terms down 2 per cent, perhaps for the first time in recent
years, during October 2008.

According to monthly analysis of India’s pharmaceutical exports between April and October 2008
prepared by the Pharmaceutical Exports Promotion Council (Pharmexcil), the exports of
pharmaceuticals and fine chemicals stood at $646.41million at the end of October 2008 compared
with $659.21 million in the year-ago period. This marked a 1.9 per cent decline.

WARNING SIGNAL

“Apparently, things are not moving well though the phrama industry is safer than many other sectors
in the current recession,” Dr P.V. Appaji, Executive Director, Pharmexcil, told Business Line.

While October 2008’s decline could be treated as a first warning signal, Pharmexcil is yet to receive
data on segment-wise details of exports and their destinations.

Even as the overall seven-month figure shows a 19.2 per cent increase in the total exports at
$6,823.5 million, there was a steady decline in growth from July 2008 which became negative by
October-end.

Forex losses

The decline could be attributed to foreign exchange losses and delayed payments, among others, he
said adding, “As the exports growth in rupee terms remained more or less unaffected during the same
period, we need to wait for the data beyond October 2008 to ascertain the full impact of the global
recession,” he said.

Notwithstanding the earlier notion that there could be no recession for use of medicines which would
act as a shield for the pharma companies, the industry is now grappling with reality of the recession.

“What probably impacted the exports is a significant decrease in stocks on hand. Due to impact of
the recession and anticipation of price reductions, from formulators to retail traders nobody is keeping
stocks in advance,” Mr M. Narayana Reddy, President, Bulk Drug Manufacturers Association
(BDMA), said.

Generally, advance stocks for 15 days to three months are kept at various levels of manufacturing
and distribution chain.

However, the exports, which were hit badly for the last five months, could be revived from April, he
added.

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