Even though the Government has tried to take along stakeholder views regarding keeping an eye on mergers and acquisitions in the pharma sector, it may not have quite plugged the gaps.
Tweaking the threshold level of M&A deals that would come in for scrutiny in the pharma sector would result in different sectors now knocking at their door on every case, points out Mr Amitabh Kumar, Senior Advisor with J. Sagar Associates, who was formerly with the Competition Commission of India as its first Director-General.
The threshold level should be brought down across the board to prevent any misuse of the provision, he told
Additionally, the transaction size or total deal size could be made key criteria for scrutiny to prevent deals from slipping below the CCI's radar, he added.
The threshold level outlined by the Arun Maira Committee for scrutiny by the CCI includes a target company with turnover beyond Rs 750 crore and assets over Rs 250 crore.
But as pharmaceutical companies have turnovers below this, except for large drug companies, the pharma sector needs to be exempted from such benchmarks, given the importance of the sector, the Committee had said.
The Government had earlier this week accepted the Committee's recommendation that the CCI would be the watchdog on M&As in the strategic and sensitive pharma sector.
FIPB and CCI
Health advocacy workers are, however, not too happy with the CCI alone being tasked with the responsibility of looking into pharma M&As. Once a deal is done, the CCI is only involved in “post-mortem” of the deal, a source said.
It should not be an “either-or” approach — instead both the Foreign Investment Promotion Board (FIPB) and the CCI should review M&As, he added. The FIPB evaluates the deal from a “health-security” angle, while the CCI assesses it from a competition perspective, he said.
Mr Kumar, however, observed that the CCI can block a deal if it would adversely impact the capability of local drug-makers. No deal can be consummated without the approval of the CCI, and there is no compulsion on them to clear any deal, he said, defending the Commission.