Foreign direct investment in the pharma sector has more than doubled to $1.07 billion during the April-August period. FDI in drugs and pharmaceuticals was $487 million during April-August 2012,according to the latest data of the Department of Industrial Policy and Promotion (DIPP).
Faced with rush of multinationals to acquire Indian pharma firms,the commerce and industry ministry is proposing to tighten the FDI policy for the sector by incorporating conditions like mandatory investment in R&D and non-compete clause in the shareholders pact.
Over 96 per cent of the total FDI in the sector between April 2012 and April 2013 has come into brownfield pharma.
The continuous acquisition of Indian pharma companies will severely impact the availability and affordability of generic medicines in the country, an official said.
The ministry is floating a Cabinet note to include major changes in the FDI policy in the sector to protect domestic generic (off-patent) firms. The government has recently cleared a Rs 5,168 crore proposal of US-based pharma firm Mylan Incs to acquire Indian generic drugs company Agila Specialties.
Other big recent acquisitions include Shantha Biotechnics by French pharma company Sanofi-Aventis. In 2008,Japanese firm Daiichi Sankyo had bought out Ranbaxy for $4.6 billion.