Looking into pharma cos takeovers by MNCs: govt

The government today said it has started inter-departmental consultations to look into concerns raised on takeovers of Indian pharmaceutical firms by multi-nationals and its possible impact on the drug prices.

Concerns have been expressed that the recent takeovers of Indian pharmaceuticals companies by multi-national firms would result in their gaining market supremacy, affecting the prices of generic (off-patent) drugs, Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply to Rajya Sabha.

"The government has initiated inter-departmental consultations on how best to address this issue," Scindia said.

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. This view was also endorsed by the health ministry.

In 2008, Japan's Daiichi Sankyo acquired a majority stake in Ranbaxy Laboratories, while Abbott Laboratories acquired Piramal Healthcare's domestic formulations business last year.

The Department of Industrial Policy and Promotion (DIPP), a nodal agency responsible for FDI-related matters, had sought stakeholders comments on its discussion paper on compulsory licensing.

"Stakeholders have made suggestions to address these concerns. The suggestions include imposing a cap of 49% and shifting FDI in the pharmaceutical sector from the automatic route to government route," he said.

DIPP too has raised concerns over the growing dominance of multinationals in the sector.

Currently, 100% foreign direct investment (FDI) is allowed in pharmaceutical sector through automatic route.