Govt mulls restrictions on MNC buyouts of local pharma cos

NEW DELHI: The commerce ministry will propose conditional approval of buyouts of local drugmakers by global counterparts to ensure public health concerns of the country are protected . The government is debating restrictions on buyout of local pharma companies by multinationals in wake of a spate of takeovers in the last three years.

The commerce department had asked E&Y for suggestions on the contentious matter. A senior industry executive had earlier told ET the firm had suggested case-by-case clearance of takeovers by putting such deals under FIPB route. The other conditions include asking global MNCs to commit to capability building in the Indian industry in areas such as manufacturing, R&D , sourcing or bring new technology and not neglect the local healthcare needs.

The existing policy allows 100% automatic foreign direct investment (FDI). There are other ways to address public health concerns without putting a cap, a person close to the development said. “A cap will send a restrictive signal (to global investors ),” he said. The government can examine these acquisitions by routing them through the Foreign Investment Promotion Board (FIPB).

The planning commission had come out against roll back of the 100% FDI in sector. The department is examining suggestions of consultancy firm Ernst & Young and will send its views to the Department of Industrial Policy and Promotion (DIPP) in next 7-10 days.