Plan For 100% Marketing Units For Drugs Opposed

Several drug MNCs have been lobbying with the government to permit them to set up 100 per cent marketing subsidiaries. The chemicals and fertilisers ministry has however been insistent on the joint venture route when an MNC wants to just import and market drugs here instead of entering into the manufacture of bulk drugs from the basic stage. This is one reason why MNCs like Eli Lilly have entered into marketing joint ventures to set up shop here.

In the policy paper prepared by it recently, the ministry for chemicals and fertilisers has argued that any move by the industry ministry to raise the ceiling for automatic approvals above 51 per cent for the drugs and pharmaceuticals sector would impinge on the drug policy. The policy has the approval of the cabinet and if the industry ministry decides to set aside its provisions, it will have to do so only after seeking cabinet approval, the paper warns.

 

The chemicals and fertilisers ministry has argued that the drug policy permits fully-owned subsidiaries only if the MNC commits itself to manufacturing bulk drugs from the basic stage and that too on a case-by-case basis.

This is because the drugs and pharmaceutical sector is different from other sectors. Quality medicines are available in India at much cheaper rates than in most other parts of the world. While the country may ultimately have to fall in line with the provisions of TRIPS, the pharmaceutical sector should be given as long a time as possible to adjust to the new order.

The basic objective behind insistence on local manufacture was to ensure a transfer of technology, creation of employment and the setting up of quality standards and to promote healthy growth in exports of drugs and formulations. The ministry states that several drug MNCs have accepted these conditions and have set up shop here. So the request by some drug MNCs for a wholly-owned status for merely marketing their products here raises questions.

The ministry has further argued that the drugs and pharmaceutical sector is one area where price control is still in force. The cost of utilities and interest rates for funds borrowed for investment and working capital are much higher when compared to those prevailing in the developed countries.

By progressively bringing down the tariff rates for finished bulk drug formulations, the government has put intense pressure on the domestic bulk drug industry. Further, by putting intermediaries and finished bulk drugs at the same tariff rate, the bulk drugs industry is being put at a disadvantage. Under the circumstances, there is little reason why special status should be accorded to the drug MNCs.