FDI Cap In Pharma Will Hurt Global Investor Confidence: OPPI.

NEW DELHI: Imposing restrictions on FDI in the pharmaceutical sector , in the wake of MNCs acquiring domestic firms would hurt overseas investment flows into India and will send a wrong signal to global investors, Organisation of Pharmaceutical Producers of India (OPPI) today said.

OPPI, an industry organisation with members mainly from the Indian arms of global pharma firms, also said the fear of increase in prices of drugs due to acquisition of homegrown firms by global counterparts is totally unfounded.

"Any move to put a cap on the FDI in pharma sector on this assumption will send a wrong signal to the global investors in all industries," OPPI President Ranjit Shahani told media.

Such a move at a time when the government is concerned about the decrease in the flow of FDI to India will lead to shifting of investments to other countries and will also discourage spending in healthcare sector, he said.

Due to impediments and uncertainties faced by the foreign investors here, they are investing in other countries such as China, where global companies like Eli Lilly, Novartis and Roche are setting up R&D activity, Shahani added.

Allaying fears that acquisition of domestic pharma companies by MNCs will lead to drug price escalation, he said India has a strong price control mechanism under the National Pharmaceutical Pricing Authority (NPPA).

"We have a very strong price control authority, the NPPA, who closely controls and monitors the prices of every single drug, effectively acting as a deterrent on any runaway pricing," he said.

"The bogey of possible cartelisation by the MNCs in the pharma sector is just not true, as penalties for such unfair practices for the parent company is very high," Shahani added.

Shahani also said introduction of MAT in SEZs is not a good move as people have already invested in these areas and investments for the companies is a long-term strategy.

Speaking on the increase of excise duty on drugs from 4 per cent to 5 per cent he said: "Increasing the excise duty on drugs from 4 to 5 per cent will make drugs expensive for the common man. The duty should have been reduced instead of being hiked".

OPPI has Abbott, AstraZeneca Pharma, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson, Merck , Novartis and Ranbaxy Laboratories as its members.

Source : economictimes.indiatimes.com