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The government is likely to give its nod to the much-awaited $1.6-billion acquisition of Strides Arcolab's injectible unit, Agila Specialities, by the US generic drug maker Mylan Inc soon. However, the deal might come with certain riders, sources said.
After the recent meeting on foreign direct investment (FDI) in the pharmaceutical sector, where the proposed deal was discussed in detail, the commerce ministry and the Foreign Investment Promotion Board are actively working on all pending proposals in the sector to clear these at the earliest.
However, some of these pending proposals, including the Mylan-Strides transaction, which involve sensitive issues involving public interest, are being scrutinised in detail in consultation with other administrative ministries and departments such as the health ministry, law ministry and the department of pharmaceuticals.
According to an official source, while there is pressure from all sides to expedite foreign investments, the commerce ministry and health ministry are clear that enough safeguards need to be put in place to ensure essential and critical medicines do not become expensive or run out of stock after the takeover of the facility.
| CONDITIONS TO APPLY |
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"There is no harm in the acquisition per se, but one has to ensure that domestic market interest and the interest of the consumer is being taken care of. We discussed the matter during the FDI meet and are still in discussion with the health ministry and various other administrative ministries," said the official. He added the conditions being discussed can be levied while approving the deal.
The riders being mooted include mandatory provisions such as the company cannot stop or reduce production of its current essential medicine portfolio before five years from the takeover date. Besides, it cannot increase prices of its existing products for a certain period. If Mylan wants to do so, it will have to seek the government's permission. It might also have to commit to a certain amount of annual investment in research and development of products relevant for the Indian population.
The Mylan-Strides transaction is the third largest acquisition deal in the pharmaceutical sector. Given the current account deficit, the government is particularly keen on this deal because it would bring much-needed foreign exchange. The proposed deal, which was initially announced by the Pennsylvania-based company on February 28, has been hanging fire for almost six months after the Department of Industrial Policy and Promotion (DIPP) raised concerns over buyouts of old facilities in the sector by multinational companies.
Even as the FIPB cleared it recently, it is awaiting Cabinet nod.
CONDITIONS TO APPLY
n Till five years from the takeover, the company cannot stop or reduce production of its current essential medicine portfolio
n Cannot increase prices of its existing products for a certain period
n Have to commit for a certain amount of annual investment in research and development of products relevant for Indians
