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04.03.2014

Russia-Ukraine faceoff won't have severe impact on Indian pharma firms: Analysts

 Indian pharmaceutical companies, which supply medicines to Russia and Ukraine, will not be severely impacted due to the ongoing tension among the two, say analysts.

Indian pharmaceutical companies have been increasing their presence in Russia and Ukraine. India's annual trade with Ukraine in 2012-13 was valued at $3.15 billion, say reports.

"Dr Reddy's Laboratories and Ranbaxy are some of the companies that have exposure to CIS (Commonwealth of Independent States). Their sales as a percentage of total sales are between 5 to 15 per cent in the region. If the tension doesn't escalate further, the shipments will continue easily in the region" said a sector analyst from a local brokerage.

The Russian threat of a military strike on Ukraine's Crimean region is a minor irritant for the Indian pharmaceutical sector, says Angel Broking report.

Amongst the Indian companies, the company with the highest exposure to the Russia and CIS is Dr Reddy's Laboratories.

"In FY2013, about 20 per cent of Dr Reddy's revenues (Rs 1,690 crore) came from the Russia and Commonwealth of Independent States (CIS), with CIS countries accounting for sales of around Rs 286 crore ( 2 per cent of sales)," said Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking.

"The Russia and CIS has been one of the key growth driver for the company. The region posted a CAGR of 21.7 per cent during the last 5 years. Thus, the geo-political scenario, if continues for long could have impact on its sales in the region. However, in near term, since the conflict is confined to the Ukraine region, the impact is likely to be low. Thus, as of now we, are keeping our estimates intact and our accumulate on the stock with a target price of Rs 3008,"Nangra added.

According to reports, exporters have confirmed that shipments have been moving smoothly across Ukraine but things may change for worse if Russia exercises military action.

So far there has not been a major military action even as reports suggest that Russia has issued ultimatum to Ukraine after seizing a Ukrainian border checkpoint at a ferry terminal between Russia and Crimea.



Source:  ECONOMICTIMES.COM

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