The Commerce and Industry Ministry will hold a meeting with the pharmaceuticals sector on Tuesday amidst opposition to Foreign Direct Investment (FDI) in brownfield projects in the industry.
Though the foreign direct investment issue is not listed in the agenda, official sources said that it will figure in the first meeting of the Consultative Group on pharma exports. The other issues that will be discussed include ‘non-tariff barriers’ to Indian pharma exports, mainly in the European Union and China.
BROWNFIELD FDI
While 100 per cent FDI is allowed in greenfield (starting a new project) pharma companies, there have been objections — including from the Commerce and Industry Ministry as well as the Health Ministry — over FDI in ‘brownfield’ projects (purchasing equity, including controlling stake, in an existing company).
The fear is that takeovers of existing companies would increase the prices of many drugs and reduce generics (off-patent) drug production.
It is learnt that the Pharmaceuticals Department is not for allowing stringent riders on foreign direct investment as proposed by an Inter-Ministerial Group, saying some of these are impractical. These include a Health Ministry suggestion that any acquired Indian entity should significantly increase its research and development spending, especially on certain diseases frequent in India.
Tuesday’s meeting would elicit the industry’s opinion on measures to enhance R&D spending as well as on a proposed clause in the FDI norms regarding mandatory transfer of technology by the foreign company to the acquired Indian company.
BARRIERS IN EU, CHINA
On non-tariff barriers, industry sources said some recent EU directives are acting as barriers to export of Active Pharmaceutical Ingredients ( substances used in the production of a drug). Such ingredients account for around 40 per cent of India’s pharma exports, while generics comprise 58 per cent.
The EU directive is to ensure that falsified or fake medicines / substances are not exported to their territory. Many EU member countries have asked India to be a member of Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Schemefor harmonised / joint inspections, they said.
Tuesday’s meeting will also discuss difficulties in obtaining registrations in China. Besides, it will seek industry’s views on improving quality, safety and efficacy as well as promotion of the ‘Brand India Pharma’ (made in India products) to ensure that the sector attains global leadership in exports.
An aim of the Brand India Pharma campaign (of the Pharmaceuticals Export Promotion Council of India) is to generate awareness that Indian generics are not counterfeits.