Govt to review FDI policy in pharma, housing tomorrow

The Department of Industrial Policy and Promotion (DIPP) is taking to the Cabinet on Thursday a proposal to ban complete takeovers by foreign companies of critical lifesaving drugs production facilities. The proposal is to lower the cap for foreign direct investment (FDI) from 100 per cent to 49 per cent, subject to approval of the Foreign Investment Promotion Board (FIPB).

The DIPP also wants critical pharma manufacturing to be declared a strategic sector, officials told The Hindu, just as on October 31, 2011 President Obama had through an executive order directed “the US FDA to take steps to prevent and reduce current and future disruptions in the supply of lifesaving medicines” as “last five years data indicates that the use of sterile injectable cancer treatment has increased without a corresponding increase in production capacity.”

``Our concern is that an alarming number of foreign acquirers of cancer oncology injectables and APIs manufacturing facilities over the last two years have post-takeover shut down the manufacturing units and R&D centres of the acquired companies,’’ DIPP officials said.

Even India's first indigenous manufacturer of the Hepatitis-B vaccine, Shantha Biotech, was acquired by the French pharma giant Sanofi-Aventis, and production there was suspended post-acquisition, they said adding that, Pfizer had divested one of its manufacturing facilities towards real estate.

The Hindu could not independently verify these examples.

“Since the acquirers' focus is more on marketing and distribution of their imported formulations, the acquisitions could make the domestic formulators’ oncology products dependent on imports,” officials said. Already, India had become dependent on imports for penicillin, they pointed out.