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A prolonged crisis in Ukraine could hit Indian pharmaceutical companies by raising the end cost of the items shipped by them, as the Eastern European nation's local currency Hryvnia has recently seen devaluation against the US dollar, according to a Ficci survey.
From an exchange rate of 8.20 Hryvnia per dollar in mid- December, the exchange rate in the beginning of March fell to 9.86 Hryvnia a dollar, a devaluation of 20 per cent. At present, the exchange rate stands at 9.05 Hryvnia to 1 USD, the study found.
The end cost of an internationally shipped item, also known as the landing cost, includes purchase price, freight, insurance, and other costs and may sometimes include duties and taxes.
Ukraine is India's second largest trading partner in the Commonwealth of Independent States (CIS) after Russia. In 2012-13, India's total trade with Ukraine was USD 3.18 billion of which, our exports were USD 519 million and imports were USD 2.65 billion.
Exports of pharmaceuticals from India in 2012-13 was USD 154 billion which is about 30 per cent of our total exports to Ukraine, Ficci said.
The troubled region of Crimea has traditionally accounted for just about 5-6 per cent of the sales of the leading Indian pharmaceutical companies, and is not a large market.
Though the industry has staved off immediate fallout of the crisis in Ukraine, industry is worried that if the trend continues, the price of imported products in Ukraine will become expensive. The higher landed cost will ultimately affect the end consumer, the study pointed out.