Indian Government Decides to Assess the Impact of FDI in Pharma Companies

The Indian government is likely to commission a study soon to assess the impact of foreign direct investment in existing pharmaceutical companies in view of concerns expressed on the issue by a Parliamentary panel. A report of the Parliamentary Standing Committee on Commerce last December had suggested that a study group be set up to investigate the effect of FDI in brownfield pharma or operational firms. The study is likely to be carried out by an independent expert, sources said.

There are apprehensions that takeovers by MNCs have impacted the generic medicine industry of the country.

"In many countries, takeovers are not allowed in strategic sectors like pharma. For India, affordable healthcare is a challenge and for that access to medicines is important," said an industry expert.

As perthe current policy, 100 percent FDI is permitted in the existing pharma companies through the approval route. The Committee had said that the government should impose a blanket ban on any FDI in brown field pharma projects.

It had also suggested for measures to stop any further takeover/acquisition of domestic pharma units. India is recognised as a major generic medicine hub of the world. The market size of the country's pharma industry is estimated at over $20 billion.

In 2008, Japanese firm Daiichi Sankyo had bought out the country's largest drug maker Ranbaxy for $4.6 billion.

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US-based Abbot Laboratories had acquired Piramal Health Care's domestic business for $3.7 billion. Another US company Mylan bought Matrix Lab while Dabur Pharma was acquired by Singapore's Fresenius and France's Sanofi Aventis purchased Shanta Biotech and Orchid Chemicals by US-based Hospira.

As per estimates, over 96 per cent of the total FDI in the sector between April 2012 and April 2013 came into the brownfield pharma.

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Source-Medindia