Although the Indian markets have traditionally been more immune to global economic instability, showing strong growth throughout 2008 and 2009, the recent depreciation of the Indian rupee might be a sign that economic difficulties have caught up to the region. At its lowest in 2011, the rupee fell to INR 54.30 per US dollar, representing a whopping 16% loss in value. A number of potential reasons aside from global economic factors have been put forth for this depreciation, however, including high inflation in the country and consistent fiscal deficits.

For medtech manufacturers manufacturing locally, a depreciation in the rupee obviously doesn't matter much. In India, however, the reality is that the vast majority of medical devices are manufactured abroad and imported into the country, where they are either sold through distributors or direct sales forces. In either case, profit margins will be severely hurt by this depreciation because manufacturing costs (incurred outside of India) will remain unchanged, while the original sales price to the health care facilities, which would be in rupees, would now be worth much less. As a result, companies have raised their sales prices to compensate, passing along the costs to end-users. It's no surprise that a jump in costs is a problem in India, where too many people still live in poverty. As a result, unit sales fell in 2011, particularly in expensive capital equipment markets. Other medical device markets aren't immune though one Indian joint replacement surgeon commented that the cost of orthopedic surgeries could go up by 15 to 20% if the rupee continues to depreciate.

Manufacturers have recognized the issue as well, with Medtronic India commenting that it's closely monitoring the situation. MRG predicts, however, that the rupee will recover through 2012, and that this will only represent a minor blip in the otherwise strong growth in the Indian medical device markets.

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