Restricting FDI in domestic pharmaceutical companies makes no sense .

New onerous restrictions on foreign buyouts of domestic drug companies threaten the health of the entire Indian pharmaceutical sector.

The tortuous vetting proposed, uncertainty and plain policy discouragement of the stake sales would thoroughly restrict cross-border investment and expertise.

To see a plot in the investment behaviour of pharma majors abroad and presume that they would jack up drug prices locally and restrict supplies is simply absurd.

All drug companies, without bias on ownership, must operate subject to domestic laws and all drugs in principle can well be subject to price controls. International drug companies are often keen to pay top dollar for brownfield investment here because they perceive huge potential in expansion and growth.

In the knowledge-intensive pharma industry, India has what it takes, with the ready availability of research personnel and skills.

The current debate in the government apparently is on what kind of norms should guide the Foreign Investment Promotion Board (FIPB) when it considers proposals by foreign pharma companies to invest in or acquire Indian companies.

The point should be to do away with the requirement to go through the FIPB altogether, and allow automatic investment in the Indian pharma sector.

India's pharma market is highly fragmented. We have a Competition Commission in place to check abuse of market dominance, in case some company has a stranglehold on a particular drug. In any case, the instrumentality of drug price control is always at hand to protect the consumer.

By restricting Foreign Investment in the pharma sector, all the government would achieve is to discourage value creation and realisation by Indian entrepreneurs.

Certainly, India does need proactive policy in pharma. But that is in the nature of creating talent and otherwise facilitating research and development and ethical drug trials.

Sophisticated information technology increasingly plays a role in drug research and trials. India has a comparative advantage here as well. We need to leverage these strengths, not turn away foreign investors.

Source : economictimes.indiatimes.com