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Govt set to make major changes in FDI pharma rule

19 Aug 2013 Evaluate

With a view to safe-guard the domestic manufacturers of generic drugs from being acquired by multi-national firms, government is set to make major changes in the foreign direct policy (FDI) in the pharmaceutical sector. It is been seriously contemplated for reducing the 100% FDI limit in the sector, in order to safe-guard domestic interests.

After a high-level meeting, chaired by Prime Minister Manmohan Singh, it was decided that the Commerce and Industry would soon start a consultation process to address 'dangers inherent' in the current model of FDI in brown-field pharma units, and bring out a Cabinet note on the proposed overhaul of the policy in the pharmaceutical sector in consultations with the Ministry of Health.

Two dimensions were mainly deliberated in the meeting. One, the proposals which came under the existing policy, had some concerns, particularly with regard to oncology, injectibles and vaccines, which must be met at all cost and that the policy will ensure. Secondly, the proposals before the Foreign Investment Promotion Board (FIPB) would go through the existing policy and if there were “safeguards that were required, to be discussed, as to what should be the nature of safeguards, to ensure that affordable life saving medicines to the public.

Among the main concerns that were raised in the meeting was, how to prevent MNCs from changing product mix from generics to branded generics or patented ones, after acquiring Indian companies, which could impact the cheapest price generic for the Indian population. Additionally, there were concerns that dominant MNCs could block small domestic players from establishing their presence in the global markets.

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