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After making way for the $1.8 billion Mylan-Strides deal last week, the Foreign Investment Promotion Board (FIPB) is set to take up another six proposals, for foreign investment in the drug manufacturing sector, during its next meeting scheduled for September 19.
As per the agenda of the meeting, the Board would consider pharma investment proposals by Shantha Biotechnologies, Kinedex Healthcare, Artura Pharmaceuticals, SD Bio Standard Diagnostics, Laurus Labs and Acebright (India) Pharma.
Many of these proposals were pending with FIPB for a long time now.
Last week, the Cabinet cleared one such long pending foreign direct investment (FDI) proposal by Pennsylvania based Mylan Inc. The American company had announced its plans to acquire Strides Arcolab’s injectible unit – Agila Specialities in February. However, the proposal was stuck with FIPB for six months as the various ministries including Ministry of Health and Family Welfare and Department of Industrial Policy and Promotion raised concerns over increasing acquisition of brownfield or existing domestic drug facilities by multinationals. These ministries feared that such acquisitions might lead to significant hike in prices of medicines, while also creating a shortage of some drugs.
However, after a recent intervening meeting chaired by the prime minister in August where he asked concerned ministries to clear all pending proposals in pharma, while creating safeguards for public interest in future proposals in brownfield, FIPB appears to have expedited the process of clearance of such plans.
Besides clearing the Strides-Mylan deal in its last meeting on August 27, the Board is learnt to have approved various other key pending proposals for foreign investment in pharma.
The government’s latest move assumes significance as the FDI inflow is expected to help narrow the current account deficit.
Hundred per cent FDI is allowed through the automatic route in the pharma sector. In November last year, the government had made FDI in brownfield or existing pharma companies stricter by putting it under FIPB scrutiny and moving it out of the automatic approval route. It was also made mandatory that such proposals would have to seek clearance from the Competition Commission of India. This came in the wake of a spate of acquisitions of domestic drug units by multinationals, mainly during 2008-2010, when various domestic firms such as Ranbaxy and Piramal Healthcare’s domestic formulation businesses were acquired by multinationals like Japan’s Daiichi Sankyo and American drug maker Abbott, respectively.
