Restricting FDI in pharma will be retrograde step: OPPI

Restricting FDI in pharma will be retrograde step: OPPI

New Delhi: The Organisation of Pharmaceutical Producers of India (OPPI) on Wednesday said any move to contain FDI in the pharma sector will be a “retrograde step".

Asserting that acquisition of domestic firms by global counterparts will not result in increased drug prices, the OPPI noted that Indian companies have also been making overseas acquisitions.

“Any move to contain FDI in the pharma industry will be a retrograde step," said OPPI president Ranjit Shahani.

He, however, welcomed the recent statement by commerce and industry minister Anand Sharma that 100% FDI in new projects would continue to be allowed through the automatic route.

“Business will gravitate to where there is value and the stance of the Indian government for 100% FDI in greenfield projects is a welcome move," he said.

Allaying fears that acquisition of domestic pharma companies by MNCs will lead to drug price escalation, Shahani said,“We have a very strong price control authority, the NPPA, who closely monitors the prices of every single drug, effectively acting as a deterrent on any runaway pricing."

Domestic pharma companies, spearheaded by the Indian Drug Manufacturers Association (Idma) and Indian Pharmaceutical Alliance (IPA), had raised concerns that the takeover of Indian companies by foreign firms could lead to a situation of over-pricing of drugs and marginalisation of homegrown firms. This view was also endorsed by the health ministry.

In 2008, Japan’s Daiichi Sankyo acquired a majority stake in Ranbaxy Laboratories, while Abbott Laboratories acquired Piramal Healthcare’s domestic formulations business last year.

Shahani, however, said it has not been a one-way traffic. “Indian firms, according to an E&Y report, accounted for acquisitions valued at more than USD 68 billion in 2010 alone. Clearly, this is a two-way street."

On the issue of limiting the cap on FDI in Indian firms that have benefited from state-funding for R&D activities, Shahani said: “One needs to look at this statement in the context of how much do Indian companies spend on research as a percentage of turnover, whether through direct funding or through state funding."

The department of industrial policy and promotion (DIPP), a nodal agency responsible for FDI-related matters, had also raised concerns over the growing dominance of multinationals in the sector.

In a discussion paper release last August, the DIPP had said the acquisitions of Indian companies by foreign multinational companies in the recent past has led to articulation of public concern on its impact on the availability of low-cost medicines.