Regulate foreign investment for cheaper medicines: Azad

November 1st, 2010 - 10:46 pm ICT by IANS  

New Delhi, Nov 1 (IANS) Health Minister Ghulam Nabi Azad Monday warned that the recent acquisition of Indian companies by foreign multinationals (MNCs) may lead to higher drug prices.

“The issue of takeover of Indian pharma companies by MNCs, which is of serious concern, needs to be tackled effectively only in terms of extant FDI (foreign direct investment) Policy for the pharmaceutical sector,” Azad said in a letter to Commerce Minister Anand Sharma.

Azad also asked the commerce minister to place all FDI in the sector under the regulation of Foreign Investment Promotion Board (FIPB).

“FDI in this sector needs to be revisited immediately, and such investments be shifted from the automatic route to the Foreign Investment Promotion Board (FIPB) route if we have to ensure healthy growth of pharmaceutical industry and availability of affordable medicines,” Azad said.

The issue of MNCs taking over Indian pharma companies has been a major concern, with experts saying it can lead to shooting up of medicine prices and decrease in production of generic drugs.

“The immediate cause of concern is the series of takeover of important Indian companies by MNCs and the trend towards domestic companies becoming junior partners of MNCs through tie-ups,” said an open letter sent by a group of social organisations, including the All India People’s Science Network and Jan Swasthya Abhiyan.

“Six major acquisitions of Indian companies have taken place in the last four years. These are Ranbaxy, Dabur Pharma, Shanta Biotech, Piramal Healthcare, Matrix Lab and Orchid Chemicals, and more are on the anvil,” the letter said.

India is the fourth largest producer of drugs in the world and a world class supplier of relatively cheap generic medicines. It is also the largest supplier of low-priced anti-retrovirals, and exports medicines to over 200 countries.

The pharma sector is a major foreign exchange earner, only next to the information technology sector, with a turnover in excess of Rs.1 billion.

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