Takeover of local pharma cos by foreign firms a concern: Sharma
New Delhi: Government welcomes foreign direct investments into the pharma sector but there are concerns that generic drugs market could be adversely hit if overseas players fully acquire local companies, Commerce and Industry Minister Anand Sharma said Monday.
India, one of the world's biggest markets for generic drugs, allows 100 percent FDI through the automatic route in greenfield projects while for brownfield projects, approval has to be sought from the government.
"We are supportive of, welcoming of 100 percent FDI in the pharma sector. There's no change in the government policy," Sharma told reporters after meeting Finance Minister P Chidambaram here.
Among other issues, the Commerce and Industry Minister discussed the issue of gold import situation with the Finance Minister.
"The only area of concern for the government is complete takeovers as it (pharma) is a growing industry that we have to protect so that Indian pharmaceutical industry particularly the generics continue to grow," he said.
Sharma said if there is a complete takeover then there could be a reversal of the growth that had taken place.
The government allows 100 percent FDI in greenfield projects in the pharmaceutical sector, under automatic route.
However, in case of brownfield projects, foreign investment is allowed only after clearance by the Foreign Investment Promotion Board (FIPB).
"When it comes to FDI in the greenfield, 100 percent is allowed. Here again, it (100 percent FDI) is allowed provided conventionalities in the brownfield are met. That is the concern and that is the real concern," Sharma said.
Last year, the government had decided that all foreign investments in existing domestic pharma firms should be allowed only after clearance by the FIPB, amid mounting concerns over availability of affordable essential drugs in the wake of multinationals acquiring local companies.
The decision was taken at a high level meeting chaired by Prime Minister Manmohan Singh that was attended by the Finance Minister, the Commerce and Industry Minister and Health Minister Ghulam Nabi Azad, among others.
Differences, mainly between the Finance and the Commerce and Industry ministries, on how much FDI in existing domestic units must be approved by the Foreign Investment Promotion Board (FIPB), had led to a delay in relaxation of foreign investment norms in the pharma sector.