A group of civil society organizations in the country have urged Prime Minister Dr Manmohan Singh to reject the Arun Maira committee proposals on foreign direct investment (FDI) in pharmaceutical sector and not to make competition commission of India (CCI) as the only agency to regulate brown field investments in pharmaceuticals in the country.
The civil society groups also urged the Prime Minister to conduct a comprehensive impact assessment study of pharma FDI in India on R&D, technology transfer, manufacturing, export, import and employment in pharmaceutical sector and also to examine the costs and benefits of foreign institutional investments, especially private equity firms, in the domestic pharmaceutical industry.
In a joint letter to the Prime Minister, the three NGOs Centad, AIDAN and NWGPL, all based in New Delhi, asked the government to take necessary steps to disincentivise brownfield FDI in pharmaceuticals and to make the foreign investment promotion board (FIPB) the nodal agency during the interim period to scrutinise the pharma FDI in consultation with Department of Pharmaceuticals (DoP), Department of Industrial Policy and Promotion and Ministry of health and family welfare. The NGOs also demanded to the government to provide an enabling policy environment to Indian domestic industry, including the establishment of a sector-specific funding institution, to not only prevent sell-offs but also to enhance the Indian entrepreneurs’ risk taking ability.
Expressing serious concern on the recommendations made by the Maira Committee, the NGOs lamented that the CCI cannot address these concerns comprehensively because its powers are statutorily restricted to ensure competition in the market. “Hence, entrusting CCI as the only gatekeeper to address concerns on brownfield investment is inadequate and ill-conceived,” they said.
After the initial intervention by the FIPB for six months, the government has decided to use only the competition law to address concerns emerging out of acquisition of Indian generic companies by the MNCs. This policy pathway is grossly inadequate to address the concerns arising out of MNC acquisitions of Indian pharmaceutical companies.
Following the Maira committee recommendations, the government had announced the FDI policy on pharma under which India will continue to allow FDI without any limits (100 per cent) under the automatic route for Greenfield investments in the pharma sector. This will facilitate addition of manufacturing capacities, technology acquisition and development. In case of Brownfield investments in the pharma sector, FDI will be allowed through the FIPB approval route for a period of up to six months. During this period, necessary enabling regulations will be put in place by the CCI for effective oversight on mergers and acquisitions to ensure that there is a balance between public health concerns and attracting FDI in the pharma sector. Thereafter, the requisite oversight will be done by the CCI entirely in accordance with the competition laws of the country.