Status quo maintained for pharma FDI norms

View emerges at PM?s meeting for all proposals to go through FIPB till CCI Act is amended

All the foreign investment proposals in the existing pharma companies will go to the Foreign Investment Promotion Board (FIPB) for approval till the time the Competition Commission of India Act is amended.

This view emerged at the meeting called by Prime Minister Manmohan Singh today to formalise the norms for pharma FDI policy, according to the sources aware of the deliberations.

This means that the status quo has been maintained for the brownfield pharma projects.

Today’s meeting was called to take decisions on the two important issues in the pharma FDI policy -- the limit to which foreign companies will be allowed to acquire share in a domestic company and the role of Competition Commission of India (CCI) in the mergers and acquisitions pertaining to the sector.

While the Finance Ministry wants that only those cases involving FDI beyond 49% in existing units should be considered by the FIPB, Commerce Ministry favours all foreign investments in existing pharma units to be approved by the FIPB.

The issue was taken up by the government after the acquisition of big Indian companies which included Ranbaxy, Shanta Biotech and Piramal Health Care’s health unit, by the foreign companies.

The domestic industry is apprehensive that the entry of foreign players in the Indian market may adversely impact the availability of generic medicines as the overseas companies would focus on costly patented medicines.

The ministerial group headed by the Prime Minister had put foreign investment in brownfield pharma on approval route in October last year.

For any merger or acquisition, the foreign companies have to seek permission from FIPB under the new norms which also calls for vetting of such deals after six months by CCI. For new projects, however, 100% FDI under automatic route is still allowed.