Multinational drugmakers have objected to proposals by Indian government advisers that the foreign direct investment (FDI) cap for existing pharma ventures should be reduced from 100% to 49%, in order to protect the local industry.
The proposal, which has come from an inter-ministerial group and has now been sent to the Planning Commission, also recommends that for brownfield pharma ventures, not only should FDI be capped but the proposed investment should also have to be approved by the government. Currently, companies only need to obtain official permission for such ventures if they are planning to invest in an Indian firm.
FDI for greenfield pharmaceutical ventures is already capped at 100%, and this should remain, the committee recommends.
The Times of India comments that this is the first instance of the government reducing the sectoral FDI ceiling to protect domestic interest groups, and adds: “the decision has been triggered by concerns that the government would be unable to pursue its policy of affordable medicine and may find it tough to use manufacturing facilities in the country to cope with epidemics and health emergencies.”
The newspaper also quotes Ranjit Shahani, president of the Organisation of Pharmaceutical Producers of India (OPPI) and also country president of Novartis in India, as warning that a cut in the foreign investment cap would have “a chilling effect.” FDI “should not stand for Funds Deserting India,” he said.
Meantime, the government is also reported to be planning to bring the prices of medicines produced from 289 essential bulk drugs under official control.
Currently, the prices of around 1,500 medicines produced from 74 bulk drugs are fixed by the government, and the extension of this policy would bring nearly a third of drugs sold in India under official control.
The government is also looking at ways to put an end to drugmakers’ long-used practice of avoiding price controls by making minor adjustments to products so that they differ from the dosages specified on the official lists. The options it is considering include restricting approval to specified dosages only, or using a provision of the Drug Pricing Control Order (DPCO) which allows the government to set prices of non-DPCO-controlled drugs if this is deemed to be in the public interest, say local reports.
