E&Y to assess impact of takeover of Indian drug cos by MNCs

The Commerce Ministry has commissioned consultancy firm Ernst & Young (E&Y) to assess the impact of recent takeovers of Indian pharma companies by multi-national firms, Parliament was informed today.

In a written reply to a question in the Lok Sabha, Chemicals and Fertilisers Minister Srikant Kumar Jena said that recent takeovers of Indian companies by MNCs could increase the possibility of other takeovers of domestic firms.

Such takeovers would have impact on the Indian health care scenario as well as on pricing and availability of medicines in the country, he added.

The pharmaceutical department have requested its commerce counterpart to conduct a study on the issue, he said.

"Department of commerce has informed that they have entrusted the task of the study to Ernst & Young," Jena said.

The recommendations of the study could be placed before the Economic Advisory Council to the Prime Minister and/or the competent authority, he added.

Jena also said that the Prime Minister has constituted a high level committee under Planning Commission member Arun Maira to consider all the relevant aspects regarding the policy of foreign direct investment in the pharma companies.

Domestic pharma companies, spearheaded by the Indian Drug Manufacturers Association and Indian Pharmaceutical Alliance, had raised concerns that the takeover of Indian companies by foreign firms could lead to a situation of over-pricing of drugs and marginalisation of homegrown firms.

In 2008, Japan's Daiichi Sankyo acquired Ranbaxy Laboratories, while Abbott Laboratories acquired Piramal Healthcare's domestic formulations business last year in multi billion dollar deals.