Pharma Industry Should be Protected From Foreign Takeover

100% FDI in pharma companies?

Commerce & Industry Ministry is bitterly opposing 100% FDI (Foreign Direct Investment) in the existing pharma companies. The ministry has questioned India’s competition watchdog CCI (Competition Commission of India) to oversee acquisition proposals of pharmaceutical companies as was recommended by a government panel. DIPP has questioned the motive of the acquiring foreign firms because they are prepared to pay many times over the sum required for setting up a Greenfield pharma unit. Health ministry is also opposed to 100% FDI in pharma companies. Both health ministry and Commerce & Industry ministry want the FDI cap pegged at 49%. DIPP (Department of Industrial Policy & Promotion) is agreeable to 100% FDI in existing as well as new pharma companies, but it wants the investment in existing pharma companies routed through FIPB (Foreign Investment Promotion Board). But the panel headed by Planning Commission member Arun Maira, which recommended FDI, favours CCI instead of FIPB as it feels that the latter lacks transparency. Foreign companies are attracted to Indian pharma industry as India produces 25% of the world’s generics and is the biggest supplier of generics to Africa.

Drug prices may shoot up if FDI is allowed

The government and the people are worried about the consequences of any move that disturbs the existing state of affairs in the pharma industry in India. People express their fears that if foreign companies make huge investments in the existing Indian pharma companies, the drug prices may shoot up. The Drug Price Control Order (DPCO) oversees the prices of important life saving drugs, but the price of other drugs and OTC products may shoot up phenomenally if the foreigners come and invest in India in a big way. If giant pharma companies enter and monopolise the drugs market in India, only very rich people can afford medicines. Common people will be denied access to generic drugs. The panel has recommended 100% FDI because of the slowdown in FDI in recent times. But FDI is a cyclical phenomenon. At one time it will increase, at another time it will decrease, depending on global economic conditions. Right now, USA and Europe are experiencing economic difficulties because of the debt crisis and hence FDI has slowed down. The panel should have considered common people’s problems and given more weightage compared to the FDI problem while submitting its recommendations.

Drugs will become out of reach of even middle class people

Since 2006, foreign companies have taken over six big pharma companies in India including Ranbaxy. Japan’s Daiichi Sankyo has taken over Ranbaxy Laboratories, US-based Mylan Inc has taken over Matrix Lab and the US-based Abbot Laboratories has taken over Piramal Healthcare. There is a fear gripping people’s mind that the entire pharma industry in India is facing foreign attack of takeover. It is not right for the government of India to allow a situation in which many drugs are out of reach of even the middle class, let alone the poor people.