Govt mulling policy on M&As by MNCs in pharma sector

The Commerce and Industry Ministry is mulling the formulation of a policy on mergers and acquisitions by multinationals in the pharma sector, a senior official said here today.

The official, who declined to be identified, said the government has been looking at the entire M&A issue from the Indian perspective.

"The two aspects to be examined will be that the MNCs after taking over the Indian company will work as per their global plan and there would be nothing specific to India in it. Secondly, the pricing of drugs might go beyond the affordability of Indian market," the official said.

The Commerce and Industry Ministry, through the Pharmaceutical Export Promotion Council (Pharmexcil) and global consultancy major Ernst & Young, has commissioned a study focusing on the five to six major M&A deals in the sector and evaluating their implications for the Indian market.

At present, there is no mechanism for preventing an MNC taking over an Indian company or vice versa. The Pharmexcil- E&Y report is expected to be complete by the year-end, sources in Pharmexcil said.

Meanwhile, the Commerce Ministry has decided to convene a meeting with officials of the RBI and other financial institutions in the wake of increasing financial constraints being faced by the domestic pharmaceutical industry.

The industry needs lot of resources for R&D, strategic tie-ups and marketing in order to compete with MNC strategies, said Ministry of Commerce and Industry Joint Secretary Rajiv Kher on the sidelines of the Pharma CEOs' conclave and 6th Annual General Meeting of Pharmexcil.

He said a recent Yes Bank report titled 'Indian Pharmaceutical Industry: Vision 2015', says that the Indian pharma industry is expected to grow at a CAGR of 14.2 per cent to $50 billion by 2015-16.

The expected CAGR of exports driven by contract research is 16.2 per cent, while the domestic market growth rate has been estimated at 12.50 per cent. It is expected that the Indian contract research industry will be worth $3 billion by 2015, he said.

He further said that the first-ever meeting with the core objective of evolving a new funding model for the pharma sector is scheduled to take place in October.