DIPP to take call on allowing 49% FDI in pharma

An inter-ministerial group has asked the Department of Industrial Policy and Promotion (DIPP) to consider allowing foreign direct investment of up to 49% through automatic route in existing Indian pharmaceutical firms.

A special group, headed by Shanktikanta Das, additional secretary in DEA, was set up to look into the matter of FDI in pharmaceutical sector. The group includes representatives of DIPP, Health, External Affairs, and Overseas Indian Affairs Ministries.

It was mandated with the task to streamline the process for approval of FDI in brownfield pharma through Foreign Investment Promotion Board (FIPB).

"The group has placed for the consideration of DIPP to allow FDI up to 49% on automatic route in brownfield pharma where the ownership and control still remained Indian," Minister of State for Finance Namo Narain Meena yesterday said in a written reply to the Rajya Sabha.

Differences between various departments had led to delay in finalising a policy related to mergers and acquisitions in the pharma sector, following which the PMO has intervened and sought a report on the matter.

In October 2011, a ministerial group headed by Singh had put foreign investment in brownfield pharma on approval route, changing the 10-year old policy of automatic clearance to address the Health Ministry's concerns after a series of acquisitions.

Some big acquisitions include Ranbaxy Laboratories buy-out by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care's health unit by Abbott Laboratories of the US.

These acquisitions raised the concern of affordability of drugs in the country.