FDI Strides ahead as PM clears Mylan

Comments 0
SummaryThe buyers will have to comply with existing conditions for such takeovers, relating to retaining production levels, R&D investments and technology transfer.

All brownfield pharma foreign direct investment (FDI) proposals currently before the Foreign Investment Promotion Board, including the February 2013 bid by Nasdaq-listed Mylan to acquire Bangalore-based Strides Arcolab’s injectables arm for $1.85 billion, are likely to be cleared at the board’s next meeting on August 27. Of course, the buyers will have to comply with existing conditions for such takeovers, relating to retaining production levels, R&D investments and technology transfer.

Future cross-border takeovers of Indian drug companies, however, might come under a new, more stringent policy dispensation, with the department of industrial policy and promotion putting its foot down at a meeting convened by Prime Minister Manmohan Singh

According to official sources, Singh directed the ministries concerned not to put on hold pending brownfield pharma FDI proposals before the FIPB citing an attempted re-formulation of the policy. He also said that any new policy should apply to only proposals coming up in the future and not to the current ones.

The Mylan deal would be the third largest in the Indian pharma space, after Daiichi Sankyo’s $4.6-billion acquisition of Ranbaxy Labs in 2008 and Abbott’s $3.7-billion takeover of Piramal Healthcare in 2010. Friday’s decision will also mean a go-ahead for another proposal by Indore-based Symbiotec Pharmalab (a cortico-steroids bulk drug manufacturer) to sell a 25% stake to private equity fund Actis for around R330 crore.

Symbiotec Pharmalab’s stake sale was put in abeyance till the DIPP finalised the policy on FDI in brownfield pharma projects involving transfer of control.

Meanwhile, the health ministry and DIPP are discussing a slew of options for future regulation of brownfield pharma FDI including a ban on such proposals that could hit the production of “sensitive segments” like oncology drugs, vaccines and injectables.

“In today’s meeting, there were two dimensions. Proposals that have come under the existing policy and the other related to concerns about takeover of oncology, injectables, and vaccines where we feel that critical needs must be met at all costs and that the policy will ensure,” said commerce and industry minister Anand Sharma after the meeting with Singh. Sharma and DIPP had argued that allowing multinationals to take over domestic drug firms would deny Indians access to affordable medicine.

India allows 100% FDI for greenfield pharma projects through the automatic route whereas in existing pharma businesses, while 100% FDI is allowed, the proposals will have to be routed through the FIPB. In the case of brownfield

Single Page Format
Ads by Google

More from Frontpage

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...