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Business News/ Companies / Biz as usual for Indian pharma cos despite Russia-Ukraine war
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Biz as usual for Indian pharma cos despite Russia-Ukraine war

This even as western firms scale down operations to comply with global sanctions on Moscow

Dr. Reddy’s has a partnership with the Russian Development Investment Fund, the sovereign fund of Russia, for the Sputnik V covid-19 vaccine htPremium
Dr. Reddy’s has a partnership with the Russian Development Investment Fund, the sovereign fund of Russia, for the Sputnik V covid-19 vaccine ht

Indian drugmakers are continuing to run their operations in Russia, which contributes nearly $600 million of their annual revenues, even as western companies scale down their businesses to comply with global sanctions on Moscow, said a senior official at a top pharma lobby group.

“We have been directed by the (Indian) government to continue supplying medicines to Russia and Ukraine, and we are following that order. But our priority remains the safety of our employees," the official said, requesting anonymity.

According to Pharmaceutical Export Promotion Council of India director general Ravi Uday Bhaskar, Indian companies are continuing to export since pharmaceutical products are exempted from the sanctions.

“While Commonwealth of Independent States (CIS) is a very important export destination for Indian companies, exports to Russia are around 50% of CIS. I don’t think Indian pharma will stop exports to this region," he said.

Last week, global pharma majors GSK, Eli Lilly and Novartis had announced plans to scale down operations in Russia.

UK-headquartered GSK said it will prioritize supplies of only essential products to Russia, and any profit from its Russian operations will be diverted towards humanitarian efforts, underscoring the company’s endorsement of global sanctions on Moscow. GSK will also take steps to ensure it has no direct involvement with either the Russian government or the military.

Likewise, Swiss pharma major Novartis said it will continue to provide access to its medicines to “every patient in the world", but will suspend investments in Russia and stop commercial marketing activities.

Indian drugmakers such as Sun Pharma, Dr Reddy’s, Glenmark and Torrent have significant presence in Russia, considering that for the larger firms, Russia has been a hedge against regulatory uncertainties of the US market, which contributes nearly 40% of their overall revenues.

In an investor presentation last year, Sun Pharma, India’s largest drugmaker, said it was prioritizing Russia as a key destination with a presence in 50 cities. In 2016, it had acquired Russian drugmaker Biosintez. The company’s portfolio includes 180 products such as ampoules, ointments, tablets, capsules, invasive solutions, powders for injection and suppositories.

For the quarter to December, Sun posted a net revenue of $700 million from emerging markets, including Russia, a 19% rise from a year earlier.

Dr. Reddy’s also nurtures close ties with the Russian market. In the June quarter of 2021, it reported an 8% growth in sales to 353 crore. The company has a partnership with the Russian Development Investment Fund, the sovereign fund of Russia, for the Sputnik V covid-19 vaccine.

Sun Pharma did not respond to an emailed query on the company’s plans to deal with the sanctions. Dr. Reddy’s declined to comment.

RDIF has also shared manufacturing rights for Sputnik V with Hyderabad-based Hetero Pharma and New Delhi-based Panacea Bio.

An analyst with a leading brokerage firm said the market is factoring in a possible write-off in the first quarter of the next fiscal due to the sanctions. “Most companies are in a catch-22 situation. If they continue to bypass sanctions, who will give the hedge against exports?" he said, seeking anonymity.

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Published: 22 Mar 2022, 01:45 AM IST
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