Concern over buyout of pharma cos that avail state benefits

New Delhi, Feb 11 (PTI) The government today said it isconcerned over the takeover of Indian pharmaceutical companieswhich have grown after availing State benefits in theirresearch and development.

Speaking to reporters here, Commerce and IndustryMinister Anand Sharma, however, said the policy of 100 percent FDI in greenfield projects through automatic route wouldcontinue.

After a spate of takeovers like that of Ranbaxy Labs,Dabur Pharma and Piramal Health Care, acquisitions have beenraised in certain government quarters like Health Ministry onwhether there is a case for restrictions on acquisitions ofthe domestic pharma firms.

"As far as greenfield investments are concerned, 100 percent FDI is allowed. But the ones where research of newmedicals and development of new drugs are concerned, which areprone to takeovers is the Health Ministry''s concern and thatis a valid concern," Commerce and Industry Minister AnandSharma told reporters here.

Department of Industrial Policy and Promotion (DIPP), anodal agency responsible for FDI related matters, too hasraised concerns over the growing dominance of multinationalsin the sector.

In its discussion paper release in last August, DIPP hadsaid that the acquisitions of Indian companies by foreignmulti-national companies in the recent past has led toarticulation of public concern on its impact on theavailability of low-cost medicines.

"Where the funding for research has been from some stateinstitutions and there had been takeovers then there areconcerns. It is not that FDI in the entire pharma sector hadbeen doubted," the minister said.

He said that senior officials of Commerce and HealthMinistry are looking into the matter.

Indian Drug Manufacturers Association (IDMA), however,was demanding that the government bring down the foreigndirect investment (FDI) in the sector to 49 per cent.

"Otherwise whole of the domestic firms would be takenover by the big MNCs," IDMA said.

Sharma further said that the government is aiming toincrease investment in innovation and R&D to two per cent ofthe GDP from a meagre one per cent currently.