Even the strongest of economic engines surrender to the market’s dark side once in a while.

India—one quadrant of that fearsome foursome known as the BRICs (Brazil, Russia, India, China)—is the latest convert, wrestling with a weakening rupee that could adversely impact the country’s medical equipment market. India’s currency has lost more than a quarter of its value since last summer’s U.S. credit rating downgrade, sliding 6 percent in May alone. Experts with the Federation of Indian Chambers of Commerce and Industry blame the rupee’s overall decline on the country’s balance of payments, which has triggered a FY2012 deficit, and a mushrooming trade deficit that stood at 10 percent of India’s gross domestic product in late June.

A further decline in the rupee’s value could be disastrous for the country’s medical device sector, which largely is dependent on imports. Roughly 65-70 percent of India’s medical equipment (items such as pacemakers, catheters, respiratory apparatus, dental devices and orthopedic implants) comes from other countries, leaving the industry vulnerable to growth-killing price hikes. “India majorly depends on imports of high-end medical devices such as imaging equipment and high-end medical implants,” PwC India Leader (Healthcare) Rana Mehta told the English language daily Indian newspaper The Economic Times. “The fall in the rupee will make the high-end equipment more expensive. As of now, though, the companies have continued to restrict from increasing the prices.”

To keep prices down, companies have begun to adopt a wait-and-see approach to medical equipment purchases. Worldwide injection system developer and manufacturer Ypsomed AG, for example, delayed the introduction of two new products to keep device prices down. “We cannot increase the prices of our product as there is tough competition and the market is not willing to increase the prices,” Ypsomed India Country Head Sanjay Rajpal griped to the Times. “On the other hand, the government is trying to further reduce the prices of diabetic devices. As a result of the rupee devaluation the margins on our product is very thin and I have to rationalize my purchases. We are planning to introduce two more products this time but my transfer price/costs are so high I had to postpone the plan.”

Still, the news isn’t all bad. The depreciating rupee may actually benefit local medical equipment exporters because their goods now are cheaper to purchase overseas, according to Mehta. About 60 percent of the country’s medical consumables are exported, mostly to African and Middle Eastern countries.

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