Umang Vohra, Chief Financial Officer at Dr. Reddy’s Laboratories Ltd., the nation’s second-largest drugmaker, comments on the impact of the U.S. sovereign-rating cut on India and the nation’s pharmaceutical industry.
Indian shares plunged after Standard & Poor’s lowered the U.S. credit rating one level to AA+ from AAA, stoking concern that global economic growth will falter.
The Bombay Stock Exchange’s Healthcare Index of 18 stocks declined as much as much as 2.5 percent. Ranbaxy Laboratories Ltd. (RBXY), the nation’s biggest drugmaker fell 0.6 percent as of 12:01 p.m. in Mumbai, and Dr. Reddy’s lost 0.7 percent.
Vohra spoke by telephone from Hyderabad in southern India.
On the impact for the company and industry:
“As a company, we don’t see a direct impact of this, as the pharma sector is insulated from such events. We will ensure that we are a lot more cautious in terms of how we use capital.”
On the economy as a whole:
“I expect liquidity in the market to be tighter. There would also be a bout of risk aversion. People would now become more cautious to lend. This may have a direct impact on the various capital-intensive infrastructure projects that have been undertaken or are being envisaged at the moment.
“I think the government would have to step in to make sure that liquidity doesn’t dry up in the market.”
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