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Karnataka pharma industry in wait & watch mode on Brexit impact
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Nandita Vijay, Bengaluru
June 30 , 2016
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Some members of the Karnataka pharma industry feel that Brexit can
affect their ease of access with European Union in future. Fall of the
Euro and pound can erode the profit margins adversely affecting the
revenue growth of the companies.
Large companies like Biocon and
Strides trade mostly in US dollars with limited exposure to GBP. But
small and medium sized companies which are looking for an entry into EU
informed that the Brexit comes as a trade barrier in the European Union.
Jatish
N Sheth, former president Karnataka Drugs and Pharmaceutical
Manufacturers s Association (KDPMA) and director Srushti Pharma said,
“We need to wait and watch the EU referendum battleground. It is a mixed
bag of both loss and opportunities. There is definitely an impact as
Britain quits the EU as our accessibility with other countries in the
European Union get impacted.”
“Brexit will lead to EU and UK look
at India as a strategic partner for pharmaceuticals because our
expertise cannot be ignored. With UK and EU economies in a wobble mode,
India can stand to gain as such situations are opportunities to be
converted for Indian pharma manufacturers. On an optimistic note , EU
and UK would now opt for India to outsource production, pointed out
Archana Dubey Mitra, vice president, international marketing, Bal
Pharma.
“Our export business, including sales in emerging
markets is primarily in US dollars, and a very small portion in Euro. We
do not have any exposure to GBP. Due to impact of Brexit it is expected
that USD will strengthen, which will benefit us since we are net USD
earners. For Euro exposure, we have hedged our revenues for next 18
months at higher rates. Also, the fallout of Brexit on commodities
prices should positively impact us in lowering operating costs for
expenses linked to crude oil prices,” informed a Biocon spokesperson.
“We
have limited exposure to GBP and we don’t foresee any material impact
on the continuing business,” according to Strides Shasun spokesperson.
Another Karnataka player is Micro Labs which has offices in the UK and Europe was not available to comment.
From
a human resource perspective, Alka Dhingra, assistant general manager,
TeamLease Services said that with Brexit, the turbulence in IT companies
among others will be for a short term only. The current business flow
from UK and Europe may continue, but new business orders may be delayed
and subsequently order expansion will be impacted for some time. As the
pound value decreases, the margins will go down and it will affect
revenue growth of the companies. Mobility to the region might become
difficult as visas will be more specific to the regions now. However,
from a long term perspective, Brexit could lead to strengthening of
India-U.K’s economic relationship. Brexit will open up many
opportunities for skilled human resources from India.
Further,
most of the companies who have their operations base in Britain for
leveraging the local as well European markets will have to rework on the
business plans. This will create more employment opportunities for
Indian IT talent across the region, added Dhingra.
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