The Government's drug policy allows wholly-owned foreign subsidiaries only for research and development activities. Pfizer's proposal for a wholly-owned subsidiary is pending with the Foreign Investment Promotion Board (FIPB). The Board took up the proposal at a recent meeting but deferred a decision.

Sources in the Government said that "Bayer's proposal would be examined on the basis of drug policy."

The government had approved a 51:49 joint venture between Bayer and Zydus Cadila HealthCare in August last year. However, the project never took off as the Indian partner lost interest in the proposed joint venture. Bayer was to invest Rs 12.24 crore for its 51 per cent equity holding in the total paid up capital of Rs 24 crore.

In its latest proposal to the Government, Bayer has stated that it is ready to bring in Rs 12.24 crore into the venture.

Zydus Cadila Health Care, the Indian partner, has given its consent to Bayer for proceeding with the venture on its own. The board of directors of Bayer Zydus Health Care has also cleared the conversion of the company from a 51:49 joint venture into a 100 per cent owned subsidiary of Bayer.

According to sources, Bayer has submitted that the joint venture was ready to be implemented just before Zydus Cadila decided not to participate. Though Bayer was fully prepared to subscribe to the equity capital of Bayer Zydus, no investments have been made till date by either of the joint venture partners. Bayer has stated that it is now equipped in termsof manpower and operational strategies to go ahead with the project. For this, it has already identified some of the products that could be manufactured and the key personnel who would be deputed to manage operations of the proposed venture.