Unlimited FDI in pharma sector worries Jena

Union minister of state for chemicals and fertilisers Srikant Kumar Jena on Tuesday seemed to indicate that he had reservations about the recently implemented policy allowing unlimited foreign direct investment in the pharmaceutical sector.

While not targeting the policy in particularly, he expressed concern over a possible increase in prices of medicines by international companies which are eyeing acquisition Indian firms after being allowed 100 per cent capital investment in the sector.

"The apprehension amongst policy makers is that if five or 10 foreign companies take over production bases in India through the 100-per cent FDI route, it would give rise to monopolies, which would be able to dictate prices of common drugs," Jena told a FICCI-sponsored pharmaceutical summit in New Delhi.

"The acquiring companies need to clearly demonstrate the value addition brought forth, either for servicing the domestic segment or significant increases in export earnings," Jena said.

"The motive should not merely be shopping for Indian companies to access one of the highest growth markets (India) or to acquire facilities and reduce competition of potential Indian pharma industry in its quest for access to emerging export markets," he said.

Jena differed with industry representatives who expressed apprehensions about a proposed price monitoring system, saying it would constrain the growth of the sector.