The Foreign Investment Promotion Board (FIPB) today cleared seven foreign direct investment (FDI) proposals in pharmaceutical companies, despite the Industry Department’s request that such investments be deferred till new rules tightening the flow of funds into the sector are in place.
The Board, headed by Department of Economic Affairs Secretary Arvind Mayaram, deferred three pharmaceutical cases on concerns over ownership control.
“In cases where issues related to control were there, decisions have been kept in suspension till the review process is completed by DIPP. We will wait for the final policy decision,” a Finance Ministry official said after the meeting of the Board.
The official did not disclose the names of the proposals that were cleared. These would be officially announced once the Finance Ministry notifies them later in the month.
The FIPB took up 30 FDI proposals for clearance on Friday, of which 10 were from the pharmaceutical sector.
The pharmaceutical proposals that were discussed include ones from Singapore’s GlaxoSmithKline Pte Ltd, US’s Mylan Inc, Mauritius-based Castleton Investment Ltd, Mumbai-based Ferring Therapeutics and Hyderabad-based Verdant Life Sciences.
Alternative policy
The Department of Industrial Policy and Promotion is discussing with the Finance and Health Ministries an alternative FDI policy for the pharmaceutical sector, to check the growing number of acquisition of Indian drug companies.
The Government allows 100 per cent FDI in the pharmaceutical sector. While investments in new projects are allowed automatically, investments in brown-field or existing pharmaceutical companies are required to be routed through the FIPB since late last year.
High-profile acquisitions of Indian companies by multinationals started in 2008 with Japan’s Daiichi-Sankyo taking over Ranbaxy Laboratories. This was followed by Germany’s Fresenius Kabi acquiring Dabur Pharma and French drug major Sanofi Aventis buying Shanta Biotech. Later, Matrix Lab was taken over by US-based Mylan, Orchid Chemicals by Hospira and Piramal Healthcare by Abbott Laboratories.