Govt plans policy options to boost pharma.

NEW DELHI: The government is looking at policy options to strengthen India’s thriving pharmaceutical industry and check growing instances of takeovers by foreign players.

The commerce department’s pharmaceuticals exports promotion council has commissioned a study to suggest ways to enhance competitiveness of the domestic industry. The department feels this will give confidence to the local industry to take on foreign competition and not sell out because of fear of getting swamped by larger players.

“We are concerned about the number of takeovers of Indian pharmaceutical companies that have taken place over the last five years and want to create domestic conditions which would make such takeovers difficult,” said a commerce department official. The move comes close after the department of industrial policy and promotion (DIPP) initiated a public debate on whether foreign direct investment (FDI) in the pharmaceutical sector has to be restricted. A restriction on FDI, currently on 100% automatic route, could contain foreign takeover of Indian companies.

The pharmaceuticals exports council of India, or Pharmexcil, has already commissioned the study to a consultant and expects it to be finalised by November end after which it would be put up for discussion by the commerce department.

“The report would look at all possible ways in which the domestic industry could be made more productive and competitive through measures ranging from making raw materials available locally for manufacturers to reducing financing costs,” said Smitesh Shah, chairman, Pharmexcil, and managing director of Calyx Chemicals and Pharmaceuticals. Other issues such as financing of patents, warehousing and development of clusters and addressing impediments to exports will also be examined.

The commerce department is hopeful that the suggestions would lead to concrete policies after discussions within the government. “We do not want to pre-judge what the study would come up with, but we will definitely push for policy initiatives that would help our industry in staying afloat,” said the earlier quoted official.

The Rs 1 lakh-crore domestic pharmaceutical industry got a jolt when the country’s largest drugs producer Ranbaxy was acquired by Japanese Daiichi Sankyo for $ 4.6 billion in 2008.

The acquisition of Piramal Health Care’s domestic business by US-based Abbott Laboratories for $3.7 billion was also a setback for the domestic industry. Other takeovers over the past years include takeover of Shanta Biotech by French company Sanofi, Dabur Pharma by German Fresenius Kabi and Matrix Lab by US-based Mylan. According to government estimates, India exports drugs worth Rs 42,000 crore annually, particularly to Africa and Latin America. About Rs 60,000 crore worth of drugs is sold in the domestic market.

Source : economictimes.indiatimes.com