Today was the Andromaco factory site visit, which let us see the inner workings of an Argentine pharmacy company. It was very interesting to be able to see the entire process from raw material to packaged, finished product. Andromaco is responsible for roughly 30% of the pharmaceutical cream market in Argentina, and their capacity to make these products was astounding. While they have enjoyed considerable success, they face several challenges in order to sustain their current profitability. One of the major issues they face is currency risk. All of their raw materials and virtually all of their equipment comes from foreign country. They import materials from countries all over the world like Brazil, India, China, United States, and Germany. This is a company that could very well be dealing with a near double-digit number of currencies. What happens when they expose themselves to a larger amount of currencies is they expose the company to greater opportunity that one of these exchange rates may crash and leave them with large losses on those purchases. The Argentinian Peso is notoriously weak right now due to inflation rates and it is difficult to predict what exchange rates will be in the future. This leaves a company such as Andromaco with increased uncertainty as to what exactly they will be paying for their inputs and fixed assets, potentially leading to large negative variances from the budget. When the future is uncertain and cash flows are hard to predict, the added variability makes deciding when to invest in the large fixed assets needed for production a difficult decision. These large purchases are dependent on being able to generate cash flows over long periods of time, and if it is uncertain if they will be able to do so it is difficult to justify their purchase. In addition, their fair market salvage value is being constantly eroded by the high inflation rate, making it harder to recoup potential losses if they do occur. These are not issues that only pertain to Andromaco; nearly all pharmaceutical firms in Argentina face the same tough decisions. How to invest in an uncertain economic climate and how to mitigate currency risk in a largely import reliant industry are not easily answered, and no one firm has all the answers. Economic stability will help, and I wish them the best in trying to see into the future.