Amid rising concerns over increasing acquisitions of domestic pharma firms by multinationals, Foreign Direct Investment (FDI) in the pharma sector grew by 86.5 percent to $ 1.08 billion during April-October period of current fiscal as compared to $ 580 million during the same period last year.
The Department of Industrial Policy and Promotion (DIPP) had proposed the norms to arrest the increasing foreign investment in domestic pharma firms as it is of the view that continuing acquisitions of Indian pharma firms by foreign companies would pose serious problems in availability of life-saving drugs to consumers in near future. Meanwhile, the DIPP proposal to reduce FDI cap to 49 percent in critical verticals from 100 percent was rejected by the Union Cabinet. DIPP also wants to restrict FDI in brown-field or existing pharma companies amid concerns that such acquisitions could shrink India’s capacity of producing low-cost generic drugs. During the period from April 2012 to April 2013, over 96 percent of the total FDI in the sector has come into brown-field pharma, reflecting meager growth in FDI in pharma green field projects. The Indian generic drug market grew at a CAGR of around 17 per cent between 2010-11 and 2012-13 mainly on the back of rising exports of generic drug due to their low cost.
Meanwhile, overall FDI into the country has declined by 15 percent to $12.6 billion during the seven month period of the current fiscal. Other sectors which received high FDI during the period include services ($1.36 billion), automobile ($784 million), construction ($699 million) and chemicals ($433 million).
The Department of Industrial Policy and Promotion (DIPP) had proposed the norms to arrest the increasing foreign investment in domestic pharma firms as it is of the view that continuing acquisitions of Indian pharma firms by foreign companies would pose serious problems in availability of life-saving drugs to consumers in near future. Meanwhile, the DIPP proposal to reduce FDI cap to 49 percent in critical verticals from 100 percent was rejected by the Union Cabinet. DIPP also wants to restrict FDI in brown-field or existing pharma companies amid concerns that such acquisitions could shrink India’s capacity of producing low-cost generic drugs. During the period from April 2012 to April 2013, over 96 percent of the total FDI in the sector has come into brown-field pharma, reflecting meager growth in FDI in pharma green field projects. The Indian generic drug market grew at a CAGR of around 17 per cent between 2010-11 and 2012-13 mainly on the back of rising exports of generic drug due to their low cost.
Meanwhile, overall FDI into the country has declined by 15 percent to $12.6 billion during the seven month period of the current fiscal. Other sectors which received high FDI during the period include services ($1.36 billion), automobile ($784 million), construction ($699 million) and chemicals ($433 million).
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