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Since May this year, we have observed a continuous process of strengthening of the dollar against the Polish zloty. This has a key impact on the medical equipment sector, says Pawel Ossowski, Vice-President of the Management Board and Managing Director of Zarys International Group, in an interview with PMR.
Most medical equipment manufactured in Asia
The Polish medical equipment industry is closely related to the quotations of the American currency. Most of the equipment used by hospitals and other health care units is manufactured in Asia, regardless of whether it is offered by Polish companies or international corporations.
A good example is medical gloves, which are mostly manufactured in Malaysia and are used not only in the medical market but also in other sectors of the economy such as industry, HoReCa, cosmetics and medicines. On the other hand, the production of basic necessities such as needles, catheters and dressing materials is largely based on contract suppliers from China. Therefore, such a dynamic appreciation of the dollar has a key impact on the medical equipment market.
– When at the end of June the exchange rate reached the levels of PLN 3.73-3.75, the industry remembered the beginning of 2018 with a warm-up. At that time the exchange rate was below PLN 3.40. Today, when the dollar exceeds PLN 4, we are talking about a nearly 8% increase in less than four months – emphasises Pawel Ossowski.
Strong dollar increases costs for hospitals
In addition, the situation is also difficult for producers with production facilities in Poland. – It should be remembered that in the case of most medical devices, raw material or components are not available in Poland. Most often they have to be imported from Asia, where the settlement currency is also the dollar. A strong American currency has a significant impact on the increased costs of manufacturing the final product – said the director of Zarys International in an interview with PMR.
Such a fast exchange rate change also causes problems in the public procurement market. In Poland, the main recipients of disposable medical equipment are public hospitals, which base their orders on public procurement law. Supply contracts are often signed for up to two years. In the case of a rapidly growing currency exchange rate, purchase prices increase, and yet suppliers have to maintain the price guaranteed in the contract.
– In extreme cases, this can lead to the termination of unprofitable contracts and to new procedures in which hospitals will already receive much more expensive offers. As prices increase, so do the costs of already indebted hospitals. This can be seen very clearly from the regular exceeding of hospital estimates prepared for a given procedure. Suppliers are not able to meet the hospital’s estimates, which were often prepared in a more favourable market situation – explains Pawel Ossowski.
Contrary to appearances, the strengthening dollar does not give a significant bonus for exporters either. – The vast majority of goods are shipped to European countries. Settlements are mostly in euro, which in recent months has also significantly weakened against the dollar – concludes Zarys’ director.