The government is likely to finalise FDI policy with regard to existing drug companies ahead of the FIPB meeting on July 5, which is scheduled to take up as many as 10 foreign investment proposals.
New Delhi: The government is likely to finalise FDI policy with regard to existing drug companies ahead of the FIPB meeting on July 5, which is scheduled to take up as many as 10 foreign investment proposals.
The Department of Industrial Policy and Promotion (DIPP) has raised concerns over spate of acquisitions of domestic pharma firms by multinationals. The DIPP has sought the intervention of the Prime Minister's Office on this matter.
Government sources said that on an average about 25 percent of the FIPB agenda is related with pharma sector.
The continuing acquisitions of Indian pharma firms by foreign companies would pose serious problems in availability of life-saving drugs to consumers in near future, they added.
Earlier, the Department had asked the Foreign Investment Promotion Board (FIPB) not to take decision on any related proposal.
FDI policy in the sector has already been discussed at the PM level in December last year. Accordingly, all foreign investments in existing domestic pharma firms was allowed only after clearance by the FIPB.
With no let up in multinationals seeking nod to acquire stake in Indian pharma firms despite government putting norms to check it, the DIPP has raised concerns stating the FDI policy in the sector needs a relook again at the PMO level.
Currently, India permits 100 percent FDI in pharma sector through automatic approval route in the new projects but the foreign investment in the existing pharma 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.
Since April 2000, USD 10.3 billion FDI has come into the pharmaceutical sector, nearly 5 percent of the total foreign inflows the country has received.
The current policy says that "the government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval".
The 10 applications for FDI in drug firms include the proposals of US-based Mylan Laboratories, Mauritius-based Castleton Investment, Mumbai-based Ferring Therapeutics and Hyderabad-based Verdant Life Sciences.