FDI in pharma sector jumps 86.5% during April-Oct

PTI New Delhi | Updated on March 12, 2018 Published on January 05, 2014

Foreign direct investment in the pharmaceutical sector jumped 86.5 per cent to $1.08 billion during April-October period of the current fiscal amid concerns over continuous mergers and acquisitions of domestic drug makers by multinationals.

FDI in drugs and pharmaceuticals stood at $580 million during April-October 2012, according to the data of the Department of Industrial Policy and Promotion (DIPP).

DIPP proposal

Although, DIPP had proposed tightening of norms for foreign investors in existing Indian pharmaceutical companies, including reducing the FDI cap to 49 per cent in critical verticals from 100 per cent, the Union Cabinet has rejected the proposal.

The department had proposed the norms to arrest the spurt in pharma MNCs taking over domestic firms that make “rare and critical” medicines. This demand was strongly opposed by the Finance Ministry.

The Planning Commission also had reservations on the proposal. On the other hand, Ministries such as Health and Family Welfare had supported it.

As per estimates, over 96 per cent of total FDI in the pharmaceutical sector between April 2012 and April 2013 has come into brownfield sector.

“The DIPP proposal was aimed at enhancing FDI in the greenfield area as the continuous acquisition of Indian pharma companies will severely impact the availability and affordability of generic medicines in the country,” a source said.

Mylan-Agila Specialities deal

The Government had recently cleared a Rs 5,168-crore proposal of US-based pharma firm Mylan Inc’s to acquire Indian generic drugs company Agila Specialties.

India allows 100 per cent FDI in pharma sector through automatic approval route in the new projects, but foreign investment in the existing companies are allowed only through the FIPB (Foreign Investment Promotion Board) approval.

Other sectors which received high FDI during the period include services ($1.36 billion), automobile ($784 million), construction ($699 million) and chemicals ($433 million).

Overall FDI into the country has declined 15 per cent during the seven-month period of the fiscal to $12.6 billion.

The Government has liberalised foreign investment norms in several sectors to attract more and more foreign players.

Published on January 05, 2014
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