Who will be gate-keeper for the pharmaceutical industry, watching over local companies being acquired by foreign owners?
The Foreign Investment Promotion board (FIPB), the Competition Commission of India (CCI) or both?
Until a final call is taken by the ministries involved, the FIPB is set to continue as gate-keeper, said a source, after a meeting on the issue convened by the Finance Ministry, on Wednesday.
Addressing public health concerns raised by the Health Ministry, and to streamline investment in local drug companies, guidelines will be outlined on the FIPB Web site, the source said.
For instance, companies looking for local acquisitions will have to ensure they continue to manufacture essential medicines (if the acquired entity was making them); and not discontinue ongoing research in critical areas.
The discussions indicate a departure from the recommendation by the Planning Commission's Arun Maira committee, last year. It had recommended the CCI as watch-dog over pharmaceutical mergers and acquisitions (M&A).
Health security
The Finance Ministry-lead group is to meet next week, as well, even as other aspects of foreign investments in the pharmaceutical sector are being evaluated by another inter-ministerial group.
The pharmaceutical sector came in for intense scrutiny, after seven acquisitions took place in five years. Local drug makers sold out all or part of their operations to foreign companies — including Ranbaxy's buy out by Daiichi Sankyo, Shanta Biotech by Sanofi Aventis and Piramal Healthcare's domestic formulations business by Abbott.
In a recent letter to Prime Minister Dr Manmohan Singh, civil society organisations urged that the Maira committee recommendation, making CCI the gate-keeper on pharma M&As, be rejected.
The CCI is equipped to handle competition issues, not complex concerns of “health security” emerging out of the acquisition of local drug-makers. Such M&As hit at the ability of local manufacturers to provide medicines at affordable prices, they said.