It is not just about competition. Public health and medicine security too are being raised as issues in the objections against the “unfettered freedom” of foreign companies to acquire existing domestic drug-makers, says the Indian Pharmaceutical Alliance (IPA), a platform of large domestic pharmaceutical companies.
In a letter to the Prime Minister's Office, the IPA has pointed out that the Foreign Investment Promotion Board (FIPB) is better equipped to be the gate-keeper for foreign investments in domestic drug-makers, especially from the public health point of view.
Protecting public health
The letter comes against the backdrop of a Planning Commission committee under Mr Arun Maira recommending that the Competition Commission of India (CCI) be the watchdog for foreign investments in existing drug operations.
But that recommendation has few supporters. In fact, on the other side of the argument stands a strong contingent, including the Union Health Ministry, Commerce Ministry and several healthcare advocacy groups, rooting for the FIPB as watchdog.
“The distinction between greenfield and brownfield foreign direct investment was made to protect public health.
“The CCI has made it clear that it cannot be expected to stop an acquisition strictly and solely on the grounds of public health.
“Not only does the Competition Act not have such a provision but, even if it had, the CCI does not have the wherewithal to take a call on the grounds of public health,” the IPA letter said, casting its lot with the growing number of supporters for the FIPB's role at the helm of pharmaceutical mergers and acquisitions (M&As).
“It is therefore appropriate that the Foreign Investment Promotion Board (FIPB) examines all brownfield investment proposals from the public health perspective and the CCI examines it under the provisions of the Competition Act,” the IPA added.
The industry body's letter comes in the wake of reports that the PMO had directed apex ministries to stick to the earlier decision of the CCI vetting pharma acquisitions. In fact, the debate on who will be the gate-keeper has consumed the Government, with committees and inter-ministerial groups looking into the issue.
The pharmaceutical sector came under the scanner after seven acquisitions took place in five years.
Local drug-makers sold out all or part of their operations to foreign companies. And this included the biggest of them all — when Ranbaxy's promoters sold their entire stake to Japanese drug-maker Daiichi Sankyo.
Judicial scrutiny
Other major acquisitions that added to the concern of policy-makers and healthcare stake-holders included the acquisitions of Shanta Biotech by Sanofi Aventis and Piramal Healthcare's domestic formulations business by Abbott.
The CCI's decisions would be subject to judicial scrutiny, whereas a policy framework including FIPB would not be subject to judicial scrutiny in the normal course, said an earlier letter to the Prime Minister, Dr Manmohan Singh, written by a set of health advocacy groups, calling for a total rejection of the Arun Maira committee recommendation.