Cautioning the government about the adverse consequences of more takeovers of Indian pharma companies by multinational companies, Congress Members of Parliament (MP) from Rajasthan Dr Jyoti Mirdha has asked the government to revisit the entire range of policies on pharmaceuticals to put a cap on FDI in the pharmaceutical sector and also to put reasonable restrictions on the sale of domestic drug companies to foreign entities through appropriate procedures to ensure that life saving drugs are manufactured within the country at affordable prices so that the nation is not held to ransom.

In a hard-hitting letter to Union finance minister Pranab Mukherjee, who is reportedly opposed to putting a cap on FDI in the pharmaceutical sector, Dr Mirdha argued that the drug industry cannot be treated like any other consumer sector. Medicines are required as an integral part of Right to life, guaranteed by the Constitution. Since some 80 per cent of the population is dependent on private healthcare, cost of medicines is borne by people out of their personal sources. “Expenditure on treatment of diseases is the second biggest cause of rural indebtedness. Medicines are sensitive items and dependence on foreign sources can put the country in serious trouble”, the Congress MP cautioned the government.

Dr Mirdha, who is a members of the Parliamentary Standing Committee on Health & Family Welfare, reminded the government through her letter that the domestic industry reached the current state of development due to a variety of policy formulations in early 70's such as FERA, drug policy, process patents etc. Nearly all of these instruments are no more available. Hence protecting and promoting the existing domestic drug sector is crucial. The nation, through tax concessions and grants, has spent huge sum of money to build capacity and encourage R&D in the domestic drug sector in the past but benefits have gone to foreign companies which have taken over some of the large Indian companies.

Taking advantage of automatic route of 100 per cent equity in the pharmaceutical sector, MNCs have acquired three out of top 10 Indian pharmaceutical manufacturers so far. Talks are on to acquire more units and some more takeovers are imminent. In addition, many companies are being roped in as junior partners by foreign manufacturers through a variety of means including (a) manufacture of low technology foreign brands both for domestic sales and exports at dedicated units on the basis of full capacity utilization, (b) offer of licence for “generic” products without litigation both at home and abroad, (c) offer to treat Indian companies as “authorized generic producers” for off-patent formulations, (d) offer to buy well established domestic brands at mouthwatering rates. The end result will be that Indian companies, in due course, will get converted into bonded entities, incapable of independent existence. At that stage they would have only one option to sell the equity, the Congress MP cautioned the government.