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Sale of vaccine firms to MNCs to get tougher

The government is likely to put restrictions on outright buyouts of domestic vaccine and cancer drug-making firms by multinational pharma giants.

The government is likely to put restrictions on outright buyouts of domestic vaccine and cancer drug-making firms by multinational pharma giants. The move could prevent deals similar to the recent acquisition of Stride Acrolabs’ injectibles and oncology subsidiaries by Mylan.

These restrictions are being incorporated in the final Cabinet note on brownfield pharma FDI, to be finalised by the department of industrial policy and promotion by last week of September.

In a meeting with the PM last month, DIPP had put its foot down on future cross-border takeovers of Indian drug companies and insisted that they should be brought under a new, more stringent policy dispensation.

However, sources said the finance ministry is likely to oppose any impediments to inflow of foreign investments at a time when it is struggling to contain a rising current account deficit.

In fact, at the meeting with PM, Planning Commission deputy chairman Montek Singh Ahluwalia had said that there is no credible case for DIPP’s stand on curbing brownfield pharma M&As. DIPP’s draft Cabinet note is currently under circulation with various ministries concerned, including finance, health and pharma.

The changes are part of the new policy that DIPP has been directed to write by the PM and will touch upon crucial issues of of R&D spends, capacity creation and technology transfer. Currently, a drug company accepting FDI has to maintain the quantitative level of essential medicines produced at the time of induction of foreign investment for five years.

The note is also likely to include medical equipment, such as implants and surgical sutures, in the overhauled FDI policy. At present, everything in the sector is clubbed under pharmaceuticals, be it drugs, medicines, medical equipment or even sutures.

Kirtika Suneja & Jayati Ghose

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First published on: 13-09-2013 at 03:54 IST
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