The value of the Russian currency plunged to an all time low yesterday despite the central bank’s decision to raise the interest rate to 17%.
Last night $1 would buy you 79 roubles and, although there has been some recovery today, the volatility has already led a number of global companies to suspend sales.
Smartphone giant Apple, for example, halted online sales on the basis that pricing iPads, iPhones and iPods was too difficult.
According to Wired magazine Russia is a small market for Apple, which sold only 1.57m of the 153m iPhone 6 units it shifted globally in 2013 in the country.
What impact the rouble rollercoaster will have on Big Pharma firms, is hard to say although, like Apple, most derive only a small amount of revenue from Russia according to Evercore ISI Mark Schoenebaum.
Schoenebaum quizzed the Big Pharma firms he tracks and found that Bristol Myers-Squibb, Merck & Co, Pfizer and Eli Lilly each generate less than 1% of their respective annual revenues in Russia.
Similarly, biopharmaceutical focused firms like Abbvie, Amgen, Biogen Idec and Gilead told him their exposure in Russia was “not material to earnings.”
He told in-Pharmatechnologist.com that: “I doubt they [Big Pharmas] will pull out.”
The decline of the rouble has been attributed to multiple factors, but most observers say falling oil prices and western sanctions prompted by Russia's action in Ukraine are the main causes.
Neither factor looks like changing anytime soon – the US plans to impose new sanctions – which suggests that the rouble is not going to be bouncing back very quickly.
It is unlikely the weak rouble will prompt firms that plan to set up manufacturing capacity in Russia - Novartis, AstraZeneca, GSK and Teva – to rethink their investments, but it may put off those that have not already committed.
Igor Stefanov from Moscow-based contract research organisation (CRO) Synergy Research Group agreed that a weak rouble makes Russia less attractive, telling us that: “It’s a common sense. Local players will benefit.”
He also predicted the research sector would benefit, explaining that a weak rouble “gives local CROs substantial benefit in competing with global CROs.”