New Delhi: On the heels of a panel, headed by the Prime Minister, approving filters for FDI in pharma sector, a parliamentary committee has begun the review of policy that could have a major bearing on the health segment.
Earlier this month, the panel had decided that for six months, FDI proposals for pharma mergers and acquisitions (M&As) would be routed through the Foreign Investment Promotion Board. After that, the monopoly watchdog -- Competition Commission of India -- would look into the matter.
The government put these filters into foreign direct investment (FDI) in the sector following concerns that drug prices will rise as several domestic firms are being taken over by multi-national companies.
The Department Related Parliamentary Standing Committee on Commerce, headed by Shanta Kumar, Member of Parliament, has taken up the subject of FDI in the pharmaceutical sector for examination and report.
A spate of M&As have taken place since 2006 involving takeover of well-known domestic firms such as Ranbaxy and Piramal Healthcare by MNCs.
There are concerns within the government and the civil society that these M&As have led to increase in prices of generic drugs.
The Committee has sought views from stakeholders on matters like impact of recent M&As on domestic pharma industry, impetus on investments in R&D and technology transfer due to the FDI in the sector.
It would also review "the impact or likely impact of FDI on drug prices, structure of Indian pharma industry and its social responsibility in terms of access and cost, ways and means to ensure availability of cheap drugs to people at large," a public announcement today said.
Besides, the committee, which has sought comments within 15 days, would look at the efficacy and structure of regulations mechanisms, if any to be placed on FDI inflow so as to ensure balance between business and public interest.
However, India will continue to allow FDI without any limits (100 per cent) under the automatic route for greenfield (new) investments in the sector.
Home-grown firms acquired recently by multi-national firms included Ranbaxy Laboratories by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care by Abbott Laboratories of US.