Policy allowing full FDI in pharmaceutical sector is under review following fears about the impact of takeovers on drug industry
Worried that the trend of multinational companies taking over Indian pharmaceutical firms will undermine the government's efforts at making the generic version of drugs available at affordable prices, the Health Ministry wants safeguards to be built into the Foreign Direct Investment process.
India today allows 100 per cent FDI in the pharmaceutical sector, but the policy is being reviewed in the wake of fears about the impact of ‘brownfield' investments — whereby foreign companies merely take over an already existing Indian company — on the future of the Indian drug industry.
As many as 61 drugs worth $80 billion are likely to go off patent in the U.S. between 2011 and 2013, making it possible for Indian companies to produce cheaper generic versions. But the Health Ministry fears the takeover of these domestic companies by MNCs would lead to essential medicines becoming costlier, thus impacting public health programmes, including the universal immunisation programme.
Keeping in view the need to exercise a certain degree of supervision over takeovers, the Ministry has recommended that prior approval of the Foreign Investment Promotion Board (FIPB) be made mandatory. And while they are not asking for a lowering of the permissible FDI, sources in the Ministry told The Hindu that steps should be taken to channel foreign investment to green-field projects.
Major takeovers
Between 2006 and 2010, six major Indian companies have been taken over by MNCs, including Matrix Lab by Mylan, Dabur Pharma by Fresenius Kabi, Ranbaxy Labs by Daiichi Sankyo, Shanta Biotech (Sanofi Aventis), Orchid Chemicals (Hospira) and Piramal Healthcare (Abbott). Since 2001, when 100 per cent FDI was allowed in the sector, only 10 per cent of foreign investment has gone to green-field ventures.
“The takeovers and mergers by multinational pharmaceutical companies of perhaps the most important Indian generic companies with the technological capacity to produce medicines and vaccines for the developing world are, in the long run, likely to impact the focus of what Indian companies produce and for whom,” says Leena Menghaneym, adviser, International Treatment Prepared Coalition-India.
The MNC takeover of generic manufacturers will further orient them away from the developing country markets, thus reducing the availability of drugs in low-income countries in the future, she argues. Indian companies merged or taken over are unlikely to produce low-cost generic drugs that will compete with their parent companies patented or brand-name medicines.
A high-level committee, headed by Planning Commission member Arun Maira, has already been looking into all aspects of the FDI policy relevant to the pharmaceutical sector.
At the Union government's request, Ernst & Young is also conducting a study on the impact of the recent takeover of Indian pharmaceutical companies, and its report is likely to be placed before the Economic Advisory Council to the Prime Minister.
Keywords: Pharmaceutical sector, FDI cap, Health Ministry, generic drug prices
1) The over the counter medicines are being sold in the American wall mart shop without the doctor's prescription at the affordable prizes. Can this possible in India with public allopathic health education?
2) The God have created the Humans and every country believes it. Therefore no body should be allowed to take the patent on Human health. Therefore ultimately drugs prizes will go low
If we saw from 2005-2010 there are so many acquisition has done in indian pharma market,and MNC are taking advantage of this but if this will happen countinuously then india will be dependent on MNC company,the name of india will change as MINI-USA so be careful
We cannot approach this emotionally. 100% FDI brought lot of technology in to Indian pharma industry. That is the reason today India stands in third position in terms of production globally. Though we are volume wise at third position value wise we are at 14th rank globally. This itself tells the cost of our medicines are the lowest in the world. Coming back to reference made about the name of the company, most of the company taken over were producing medicines for US markets and other markets . they does not produce for Indian market. The cost increase for drugs is because of patent laws not because of FDI.
The alarm raised is too late, 100% FDI investment in pharma has brought in nothing to India as such. These investments are not for any patent or for any speciality sectors but they are purely for survival of MNC as they are facing degrowth on home turf. BRIC countries and especialy india comes out as thier first choice. As Indian mkt is poised to double by 2015 with major growth driven by tier 2 cities, mass expansion, mass products , contract manufacturing , mass contracted field force is the anthem they are singing. noway it will help indian mkt in any way prices are bound to rise also culling of well established domestic companies will take place. Montek is busy helping his american friends.
Takeover of Indian Pharma companies by MNCs will lead to environmental disaster. India should not become dumping yard of chemical wastes produced by MNCs. I am also hearing that clinical trials are taking place in India mostly. Indians are not mice to inject anything to test. Starting a pharma company and doing clinical trials is not that easy in United States. We have to follow stringent rules and regulations. But in India we can do anything throwing rules and regulations in dust bin. It is patheic to see they are using our hand to throw mud on our head. It is better to start School of Public Health in each and every University in India to make awareness of Environmental Health/epidemology among poor people. Prevention is better than cure.
The fears are unfounded! The prices of products after the acquisition of Ranbaxy, Piramal and Sanofi never went up. In fact the prices of Ranbaxy products went down after acquisition. Such speculations will give very negative signals to the global investors in the post liberalization era. It is a fact that after price control, essential drugs never reach patients due to poor healthcare infrastructure. The government should therefore concentrate more on building infrastructure and continue price monitoring rather than limiting FDI or imposing price controls.
indian authorities are waking up too late there is avirtual sell off in the pharmaceutical industury- in July Montek said that there is no need to for any safegaurds - to hush the matter s beuracratic side burner was created just to keep matter pending. The fact of matter is that Montek has allready pleased his masters especialy the americans with a good portion of the flesh - allmost some 20 company takeovers / brand accuisations have taken place - Abbott ( american mnc ) after takeover of Piramal is the biggest company in indian pharma industury. Abbott has adopted unfair labour practices - has made a mockery of indian laws and the indian system and the workers ( media should get in touch with the Abbott worker forums and FMRAI - they will give all details ) 50% market is allready under MNC control and its matter of days not years that MNC will have total control. Conditions of global degrowth has led into a situation for these companies rush to INDIA,
It is unfortunate our Government is taking some nasty decessions in various fields, this is one of the example in the pharma field too.We are providing many facilities to the industries establishment in our country like drugs & pharmaceutical industries etc. We provide lands and other services at a cheaper cost finally they are misusing our resources by handing over to the multinational for their individual financial profits. Our government did not show any interest towards the survival and running of Indian Drugs and Pharmaceutical Ltd.,The company which produced many generic drugs and life saving medicines to the millions was closed practically at Hyderabad city in AndhraPradesh state removing its thousands of employees keeping the unit idle till now.it was once medicine for millions once upon a time,at this juncture we would have utilised its infrastructure and services. This was one of the government sector in those days by the USSR collobaration in the pharmaceuitical field.
By the latest takeovers India has got not less than Rs.50,000 crore investment as FDI but this has not made any impact in improving employment or increasing production or bringing in new technology. But in long run if this trend is not checked we will become dependent for even essential and life saving drugs, a change from exporting capacity to importing necessity.
The following sectors should be taboo for FDIs and hence MNCs,lest
Indians suffer:- 1.Banking And Finance. 2.Pharma. 3.Food and Agriculture. 4.Education. 5.Defence and Nuclear. 6.Water and Infrastructure. It is very insensitive of the UPA to have allowed,100% FDI in the Pharma Sector.
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