Anand Sharma seeks review of pharma sector FDI policy

Concerned over the increasing trend of foreign investment in the pharmaceutical sector taking the acquisition (brownfield) route, commerce and industry minister Anand Sharma has urged Prime Minister Manmohan Singh to convene a high-level meeting to review the current policy.

Instead of creating or expanding the sector, the current policy has only helped to consolidate the industry in the hands of a few, Sharma pointed out in a letter addressed to the prime minister.

''Foreign direct investment (FDI) in the pharma sector has neither proved to be an additionality in terms of creation of production facilities nor has it strengthened the R&D in the country. These facts make a compelling case for revisiting the FDI policy on brownfield pharma,'' Sharma said in hs letter.

''I would urge the PM to call an urgent high-level review meeting, along with finance minister, health minister, pharma minister, and the undersigned (myself) to deliberate on the matter,'' he said.

Foreign investment in existing pharmaceutical companies are allowed only through FIPB's approval although India allows 100 per cent FDI in new projects in pharmaceutical sector through automatic approval route.

''In case the FDI policy continues ... then our domestic capability will gradually wither away. In that eventuality India would be compelled to be dependent for life-saving medicines either on domestic facilities of MNCs or on imports,'' Sharma said.

The Indian industry has already lost control over critical drugs and medicines and is import dependent for intermediates and vital drugs like penicillin, which is a matter of serious concern, he said.

The pharma sector in the country received brownfield investment to the tune of $989 million between April 2012 and April 2013 against a mere $87.3 million investment in greenfield investments, according to RBI data.

''Clearly, most of the FDI in pharma during this period has been brownfield, thereby merely a substitution of domestic capital by foreign capital rather than an additionality,'' Sharma said.

The Department of Industrial Policy and Promotion (DIPP) had earlier this month raised concerns over spate of acquisitions of domestic pharma firms by multinationals.