The Foreign Investment Promotion Board (FIPB) of
India was planning to consider the FDI
proposals for the pharmaceutical sector in India in the
last meeting. However, as per media reports, FIPB has postponed all
the foreign investment proposals in the pharmaceuticals sector of
India. The applications of foreign pharmaceuticals firms cannot be
cleared in these circumstances.
Interestingly, a department of industrial policy and
promotion (DIPP) representative told FIPB that commerce minister
Anand Sharma is also in agreement with postponing of the FDI
proposals. This has taken the applicants for a surprise as the
guidelines were finalised with DIPP's consent and FDI proposals in
the pharmaceuticals sector are being cleared by FIPB, as sought by
DIPP. The new guidelines are now awaiting approval of the Prime
Minister's Office.
It has been suggested by the panel that conditions
such as commitment by the buyer to manufacture and make available
essential drugs post acquisition for five years and also to increase
research and development (R&D) expenditure by 5% for diseases
prevalent in India must be imposed to allow foreign firms buy Indian
companies. It left it to DIPP to decide if the riders be imposed for
acquisition of more than 49% of management control.
The consolidated
FDI policy of India 2012 by DIPP is proactive on many
counts and it covers vast areas of public importance. One such area
pertains to FDI
in pharmaceuticals sector of India. India has been taking
special interest in FDI
in pharmaceutical companies producing life saving drugs in India.
This is more so when the mergers and acquisitions (M&A) and
foreign
direct investments (FDI) in pharmaceutical sector of India
are on hot list.
India is also planning to reduce prices of expensive
patented drugs to make medicines affordable to its predominantly poor
population. In fact, a committee has already finalised a proposal in
this regard and it will put it out in the public domain in a month or
so. There could be reference pricing system (for patented drugs) or
fixed-pricing, but a final decision has not been taken.
These steps have been taken in addition to India’s
stand to provide medicines at a more affordable price after it
announced earlier this month that it would implement a $5.4 billion
plan to provide free generic medicines to its people.
Internationally, a system of reference pricing for
medicines exists across developed markets such as the United States
and Europe as well as in emerging markets.
