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Govt approves slew of FDI proposals in pharma, with riders

11 September, 2012

The Indian government has relented over a contentious proposal to put a spanner on all fresh foreign direct investment proposals in the pharmaceutical sector. The foreign investment promotion board (FIPB), the nodal government body approving all foreign investment proposals in the country, has cleared eight proposals (all of which were deferred in earlier deliberations) by foreign investors to invest in Indian drug manufacturers, though it has added few riders.

The proposals relating to FDI in brownfield pharmaceutical sector that were given the green light include Rs 800 crore investment in the Indian arm of world’s largest drug maker Pfizer.

Other proposals include Rs 50.4 crore investment related to Zim Laboratories (Nagpur), Rs 12.5 crore in Vyome Biosciences, Rs 100 crore in Stellence Pharmscience (Bangalore), Rs 372 crore in Arch Pharmalabs (Mumbai), Rs 200 crore in Sutures India (Bangalore), Rs 58.8 crore in Ordain Health Care (Chennai) besides German healthcare products major B Braun’s proposal to bring in Rs 248.4 crore. Braun had recently announced a deal to acquire majority stake in public-listed formulations and healthcare consumables firm Ahlcon Parenterals (India) Ltd.

The investment proposals have been approved subject to three conditions:

(i) The quantitative level of NLEM (National List of Essential Medicines) drugs production annually at the time of induction of foreign investment will be maintained at that level for the next five years. The level would be defined as the highest annual production level of NLEM drugs in quantitative terms, in any of the three years preceding the induction of foreign investment.

(ii) The R&D expenses annually incurred by the investee company at the highest level in the three preceding years to the induction of foreign investment will be maintained in value terms annually over the next five years post induction of FDI.

(iii) The administrative ministries concerned and the FIPB secretariat will be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company.

The government had been mulling over restrictions on FDI in pharma sector over various concerns including (initially) takeover of Indian drug companies by MNCs and thereafter over apprehension that the foreign drug makers would cease making essential drugs in the country and also curtail local research. These issues have been dealt with in the riders put across by FIPB.

(Edited by Prem Udayabhanu)


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Govt approves slew of FDI proposals in pharma, with riders

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