The decks have been cleared for US-based Mylan Inc’s Rs 5,168-crore acquisition of Indian generic drug-maker, Agila.
An inter-ministerial group met on Friday to decide on the fate of pharma FDI proposals stuck due to objections raised by the Department of Industrial Policy and Promotion. DIPP is an arm of the Commerce Ministry. The Ministerial group, headed by the Prime Minister, ruled that the existing FDI policy will apply for approval of all pending pharmaceutical proposals.
With this, the Government has set aside the concerns raised by the Commerce and Industry Ministry on foreign companies taking over the Indian market for injectibles, especially those related to cancer. “The present proposals — before the FIPB or as approved by it — will go through under the existing policy. There are conditions that have been put in, with regard to investments, R&D and manufacture,” said Commerce and Industry Minister Anand Sharma, addressing reporters.
The Ministry’s main concern was that the availability of affordable medicines in the country would be affected if domestic capabilities in manufacturing generics (cheap copies of off-patent drugs) are curtailed. According to RBI data, over 96 per cent of foreign direct investment (FDI) in the pharma sector in the past year came into brownfield (that is, existing) projects.
Undeterred, the DIPP has now decided to approach the Cabinet with proposals to restrict the Foreign Investment Promotion Board (FIPB)’s handling of future proposals related to vaccines, injectibles and oncology medicines (cancer drugs), a senior DIPP official told Business Line .
In a note to the inter-ministerial group, the DIPP had warned that the Indian market for oncology injectibles was highly concentrated, with foreign companies accounting for over half the share.
Many companies have been outsourcing clinical trials to India. Industry analyst Sarabjit Kour Nangra, Vice-President-Research (Pharma), Angel Broking, believes that in the long run the R&D segment will also attract investments. “Most international companies are interested in Indian firms because of their manufacturing capabilities and this will increase India’s presence in the global market,” Nangra said.