While making adverse impacts on the domestic industry, public health and IPR regime, the take-overs of Indian companies by the multinationals have not added fresh capacity, nor generated employment or gave push to the research and development, if the report by the Parliamentary panel on Commerce is any indication.
“The Committee is of the view that FDI flow into brown field projects has not added fresh capacity in terms of production, distribution network or asset creation to the desired level. As a result, significant strides have not been made in creating fresh jobs and transfer of technology,” the report by the Parliamentary Standing Committee on FDI in the pharmaceutical sector said.
“It can be deduced from the figures that the FDI inflow into Research & Development of the Pharma Industry has been totally unsatisfactory. The Committee expresses its dissatisfaction that despite the profusion of FDI into the pharma industry in general, R&D in pharma has not got any significant benefit in particular. This trend is indicative of the fact that FDI is primarily being used to strengthen the business network of pharma MNCs and in keeping the domestic pharma companies in a subservient position without adding anything positive to the Indian health scenario. It is high time the Government took concrete steps to attract and ensure substantial amount of investments into R&D sector of the pharma Industry with special thrust on tropical diseases,” the panel said while suggesting blanket ban on FDI in the existing companies.
“The Committee finds that acquisitions/collaboration of local companies has unfortunately forced R&D priorities to be increasingly set in tune with global trends neglecting R&D on 'tropical diseases' and also capability development of NCEs in this process,” it said.
“The Committee is of the view that such collaboration is being valued more for the patients India can provide as guinea pigs for clinical research rather than for competencies. The Committee expresses its displeasure over such alliances of convenience. The Committee also condemns these unethical practices being pushed by pharma MNCs.
Needless to mention such a situation has arisen owing to the absence of a strong regulatory framework. The Committee recommends that the Government frame guidelines for safe clinical trials and ensure its strict implementation,” it said.
The Committee also felt that FDI had failed to bring about any real change in the existing pharma R&D environment as domestic pharma companies are still to gain the competence and capacity to achieve cutting-edge drug innovation by carrying a new compound through all stages of research up to marketing.
“The Committee fears that these MNCs can change or tweak the product mix and can go from producing generics into branded or even more expensive patented medicines. Its direct impact will be on the availability of the cheapest priced generics for Indian population which may decrease substantially. There is also the fear that a foreign company may not easily agree to compulsory licensing which will not be the case in an Indian company. Once a foreign company takes over an Indian company, it gets the marketing network of the major Indian companies and, through that market network, it changes the product mix and pushes the products which are more expensive and there is no provision to stop an MNC from changing the product mix. Internationally, because of its huge network and access to other markets, it can block our smaller domestic companies from establishing their presence in the global market,” the report said.
The Committee felt that though the prices may not have increased significantly now but there is a threat that once the domestic capacity is crushed under the weight of the dominant force of multinational pharma companies, the supply of low priced medicines to the people will get circumvented.
“The Committee notes that the adverse effect of takeover/acquisition is starting to show as the export performance in dollar terms during 2012-13 has not been satisfactory as compared to the past two years. The targeted figure of US$ 24 billion exports would be difficult to achieve by the projected time-line of March, 2014,” the report said.