Rupee depreciation to aid export margins, says Biocon

Here is one sector that is happy about the rupee depreciation. Indian pharmaceutical companies that have huge base in the western markets are poised to make good of the widening differential in exchange rates of the currencies between the two markets. CNBC-TV18 caught up with Biocon chairperson and managing director, Kiran Mazumdar-Shaw, to figure what is happening with the company and the industry.

Speaking to the channel in an exclusive interview, Mazumdar says that the research division is set to benefit from the fall in the value of rupee. "That apart, Biocon will see margin improvement in exports due to the rate differential," she says. Below is the edited transcript of the interview. Also watch the accompanying video. Q: The rupee is falling and the dollar is getting expensive; so you would be a net gainer? A: Yes. We have large export business so we gain from that but we have been very cautious about currency fluctuations. We have taken adequate cover for these currency fluctuations but businesses, especially the research services business, will certainly benefit out of this rupee movement. Q: How would the depreciation of the rupee help you in terms of margins? What kind of a positive impact it would have for you? A: It depends on how long the rupee is going to remain at this devalued level. It is difficult for me to speculate that, but certainly we will see margin improvement in our exports. Q: What about the Malaysian facility and revenues from the Pfizer project? A: Last week, the Malaysian facility broke ground and we expect this facility to come up over the next two and half years. We will certainly recognise revenues from Pfizer as this project is something that will reflect in our earnings going forward. We are pleased that we have embarked on an overseas manufacturing project. Malaysia is a very business enabling environment. We need to learn how other governments are attracting investments and how their policies are helping businesses grow. It is becoming very difficult to grow our businesses in India given the kind of surroundings and policies that are being enacted. Special economic zones (SEZs) have to undergo serious reforms if we want to take full advantage of what is happening in these SEZs. Q: Can you give us some understanding about how your profit and loss statement (P&Ls) will start reflecting the Pfizer deal, what should an investor pencil in for this year? A: These revenue recognitions are linked in terms of the project that we have started in Malaysia. These are more predictable kind of revenue recognition milestones and we will be able to recognise some of these manufacturing milestones this fiscal. In terms of other milestones and revenue recognition, these are linked to regulatory approvals even when it comes to start clinical trials. So, it is difficult to say exactly how much of it can be reflected but a certain amount will definitely be reflected this fiscal. We, however, expect much larger amount to start being reflected from next fiscal onwards as the project and the regulatory development also gain momentum. Q: How much do you think Syngene revenues can grow this fiscal after the 21% growth that we saw last year? A: We wouldn