FDI Cleared for 100% Investment in Indian Pharma Sector

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Apr. 5 – The Department of Industrial Policy and Promotion has rejected a proposal from the Department of Pharmaceuticals for limiting the amount of FDI into the sector to 49 percent stating that apprehensions about the industry were misplaced.

The ruling means foreign pharmaceutical companies may invest in the sector at up to 100 percent ownership.

The Department of Pharmaceuticals had proposed to limit the FDI in domestic pharmaceutical manufacturing to 49 percent, arguing in inter-ministerial consultations that acquisitions of domestic drug companies were increasing.

“We do not want to be in a situation when vaccines for epidemic like H1N1 flu are completely in the hand of foreign players and they are free to charge exceptionally high price,” said a pharmaceutical department official.

However, DIPP rejected the contention stating it did not find any sensitivity in the issue. “DIPP does not see any problem in continuing with the current policy of 100 percent FDI through automatic route,” a DIPP official said.

There has been an increase in the number of acquisitions made by multinationals in the segment. In 2008, two Indian pharmaceutical companies were acquired from abroad, Ranbaxy by the Japanese firm Daichii, and Dabur Pharma by Singapore’s Fresenius Kabi.