With no let up in multinationals seeking nod to acquire stake in Indian pharma firms despite government putting norms to check it, DIPP has raised concerns stating the FDI policy in the sector needs a relook again at the Prime Minister's level.
New Delhi: With no let up in multinationals seeking nod to acquire stake in Indian pharma firms despite government putting norms to check it, DIPP has raised concerns stating the FDI policy in the sector needs a relook again at the Prime Minister's level.
"Despite the tightening of the policy, several global pharma companies are looking to buy stake in Indian firms. The policy needs to be relooked again at the Prime Minister's level," an official said.
The Department of Industrial Policy and Promotion (DIPP) is understood to have raised concerns on the policy with as many as four applications for investments in drug firms came up for discussion in the Foreign Investment Promotion Board (FIPB).
The proposals included two related to US-based Mylan Laboratories; Japan-based Terumo, and another of Medreich, a domestic firm.
Interestingly, DIPP is raising concern again despite comprehensive discussions at the PM level had led to a decision in December last year. Accordingly, all foreign investments in existing domestic pharma firms was allowed only after clearance by the FIPB.
The decision was taken on the back of increasing concerns over availability of affordable essential drugs in the wake of multinationals acquiring local companies. DIPP had earlier pushed for only up to 49 percent FDI in existing domestic pharma firms, which was turned down.
"The DIPP strongly view that the policy needs to be relooked at the highest level," the official said but did not specify details what were the current major concerns.
The DIPP, under the Commerce and Industry Ministry, is the nodal agency for the foreign direct investment (FDI) related matters.
Currently, India permits 100 percent FDI in pharmaceutical sector through automatic approval route in the new projects but the foreign investment in the existing pharmaceutical companies were allowed only through FIPB's approval.
In 2008, Japanese firm Daiichi Sankyo had bought out the country's largest drug maker Ranbaxy for USD 4.6 billion. US-based Abbot Laboratories had acquired Piramal Health Care's domestic business for USD 3.7 billion.
US-based 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.
Since April 2000, USD 10.3 billion FDI has come into the pharmaceuticals sector, nearly 5 percent of the total foreign inflows the country has received.
The current policy says that 'government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval'.