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Even as the final draft of the FDI policy for the pharmaceutical sector is stuck in inter-ministerial differences, the government seems to be hastening approvals for pending proposals in the segment.
After clearing four investment proposals for existing drug manufacturing units in May, the Foreign Investment Promotion Board (FIPB) cleared another seven today. Industry officials say 48 proposals in the sector were pending for FIPB approval as of April.
The Board, headed by Arvind Mayaram, secretary, department of economic affairs, discussed 30 investment proposals on Friday, ten of these being in the pharma and biotechnology sector. Ten were approved; three were deferred due to ownership issues. The proposals discussed included a joint one from Singapore's GlaxoSmithKline Pte Ltd and Mauritius-based Castleton Investment Ltd, USA’s Mylan Inc and Ferring Therapeutics.
The proposals approved in May included two from Mylan Laboratories and one each from Terumo Mauritius Holding and Medreich.
Though India allows 100 per cent FDI in the pharma sector, proposals for existing companies now require a FIPB nod, as the government wishes to be cautious in allowing foreign investment for expansion projects. After a spree of acquisitions of existing facilities in the sector, both the health ministry and the department of industrial policy and promotion (DIPP), the latter being the nodal one for FDI, raised concerns about enhanced multinational presence resulting in increased medicine prices.
The Centre last year made a distinction between an investment proposal for a new company and for expansion in existing ones. The move led to differences between ministries over the norms for clearances, resulting in a delay in approvals. These issues were discussed even earlier this week between DIPP and the finance ministry.
In 2008, Daiichi Sankyo of Japan had bought Ranbaxy for $4.6 billion. Then, US-based Abbott Laboratories acquired Piramal Healthcare's domestic formulation business in 2009 for $3.7 billion. Other such acquisitions include Mylan buying Matrix Lab, while Dabur Pharma was acquired by Singapore's Fresenius Kabi. Sanofi Aventis also purchased Shanta Biotech. Since April 2000, nearly Rs 50,000 crore of FDI has come into the pharamaceuticals sector, making it one of the top five sectors preferred by foreign investors.
Industry officials say the renewed clearances of some proposals is a relief but the government is still conservative about ownership issues.
