FDI policy in pharma sector set for major overhaul

Aug 17 2013, 10:22 IST
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SummaryMove to protect generic drug makers from being acquired by MNCs.

Commerce and industry minister today said the government is working on bringing in amendments in the foreign direct policy (FDI) in the pharmaceutical sector with a view to protect the domestic manufacturers of generic drugs from being acquired by multi-national firms.

“Today’s meeting looked at two dimensions. One is that the proposals which have come under the existing policy, there are some concerns, particularly with regard to oncology, injectibles and vaccines, where we see there is a critical need which must be met at all cost and that the policy will ensure,” Sharma told reporters after attending a high-level meeting chaired by Prime Minister Manmohan Singh.

He added the proposals before the FIPB would go through the existing policy and if there were “safeguards required that will be discussed as what should be the nature of safeguards so that affordable life saving medicines are available to the people”.

For the amendments, the Department of Industrial Policy and Promotion will start consultations with the concerned departments, including the health and finance ministry. A draft Cabinet note would be circulated soon. The changes would be prospective in nature, an official said.

Currently, 100 per cent FDI is allowed in greenfield pharma projects under automatic route while for brownfield projects, FIPB approval has to be taken.

“Whatever changes the department of industrial policy and promotion (DIPP) has suggested should not come into effect retrospectively,” said Arvind Mayaram, secretary, department of economic affairs.

Though Mayaram declined to comment on specific proposals with the FIPB, such a move would impact pending proposals like that of US-based Mylan Inc’s proposal to acquire an Indian pharma company as well as another proposal by Symbiotech Pharmalab.

According to the proposal, the health ministry would be asked to suggest whether any specific critical verticals in the sector should be retained only with the Indian companies in case of M&As. The official said that one of the main concerns raised was how to prevent MNCs from changing product mix from generics to branded generics or patented ones after acquiring Indian companies, which could impact the cheapest price generic for the Indian population.

There is also concern that the ability of Indian firms to take advantage of the situation of blockbuster drugs going off patent through 2015 could be impaired. As many as 67 per cent of drugs worth $80 billion is expected to go off patent during 2011-2013.

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