India will scrutinise foreign investment in pharma
pharmafile | October 11, 2011 | News story | Manufacturing and Production, Research and Development, Sales and Marketing |Â Â India, Indian pharmaceutical industryÂ
The Indian government has decided not to put any restrictions on the level of foreign direct investment (FDI) in the pharmaceutical sector, but it is considering applying ‘filters’ to help preserve India’s domestic drug industry.
A high-level meeting chaired by Indian Prime Minister Manmohan Singh yesterday concluded that India will continue to allow 100% investment by overseas organisations in pharmaceutical operations “under the automatic route for greenfield investments”.
However, in the case of brownfield investments in pharmaceuticals, the government will require approval of any proposed deals by India’s Foreign Investment Promotion Board (FIPB) for an interim period of up to six months, according to the national Press Information Bureau.
In the meantime the government will examine whether any additional regulations need to be drawn up “to ensure that there is a balance between public health concerns and attracting FDI in the pharma sector”. Thereafter, the Competition Commission of India (CCI) would look at all brownfield investments in the context of the competition legislation.
The meeting was held in response to the so-called Maira report, which was published in June and examined the impact of merger and acquisition activity in India’s pharmaceutical industry and looked in particular at whether large-scale takeovers of Indian companies by multinational drugmakers could have a material impact on the domestic sector.
One concern often raised is that too much involvement by foreign companies could lead to price increases and restrictive trade practices, and possibly impact access to medicines for some sections of Indian society.
The high-level meeting took on board the findings of the Maira report and concluded that preserving a 100% FDI allowance for greenfield investments “will facilitate addition of manufacturing capacities, technology acquisition and development” in India.
It was attended by India’s Finance Minister Pranab Mukherji, Health Minister Ghulam Nabi Azad, Commerce, Industry and Textile Minister Anand Sharma, Pharmaceutical and Chemical Minister MK Alagiri, and Deputy Chairman Planning Commission Dr Montek Singh Ahulwalia.
Phil Taylor
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