India’s pharma sector is among the most vulnerable to the Russia-Ukraine war’s effects

Russia’s invasion of Ukraine has made the Indian pharmaceutical industry among the most vulnerable. Entities linked to the industry, like fertiliser makers, are the most exposed, credit agency India Ratings and Research (Ind-Ra) stated on March 7.

“Pharma has meaningful exports to the countries in the Commonwealth of Independent States, which, coupled with the ongoing pressure on generic pricing in the US, could impact the profitability of some companies in the sector,” the agency said in a note.

Ind-Ra further warned that in the event of a prolonged disruption, the business risks could increase.

“If the government were to refrain from increasing the fertiliser subsidy, the deficit would need to be funded by the balance sheet of fertiliser companies, thus deteriorating their credit metrics. The credit impact on fertiliser companies is assessed to be manageable, given their low leverage,” it said.

“Ind-Ra believes the duration and intensity of the war will be the key determinant for the macro and micro risks.”

The potential obstacles before the country’s pharma industry have come at a time when it was rejoicing in the growth led by the Covid-19 pandemic. In 2021, it witnessed a growth of 21% as compared to 3% in 2020.

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