Planning Commission panel for slashing pharma FDI

An expert group constituted under the Planning Commission has recommended reducing foreign direct investment (FDI) limit in the pharmaceutical sector to below 49% in order to bring down the cost of medicines.

Currently, the government allows 100% FDI in the sector through automatic route.

The 15-member high level group on universal health coverage, chaired by K Srinath Reddy, in its report has said that the government should “revisit FDI rules to bring down share of foreign players to less than 49%”.

The expert group has also recommended reviving drug PSUs in the country by infusing capital and providing autonomous status to them.

In October last year, the Planning Commission had set up a high-level expert group to develop a blueprint and investment plan for meeting the human resource requirements to achieve ‘health for all’ by 2020.

In order to provide cheap vaccines in the country, the expert group has also recommended revival of old vaccine manufacturing units with additional infusion of capital and new vaccines parks with autonomous status.

Recently the ministry of commerce had appointed research agency Ernst & Young to study the impact of a series of acquisitions in the domestic drug industry by foreign companies.

Section in other ministries such as finance and health have also expressed apprehensions over the possibilities of a cartel like situation in the country due to increasing presence of the multinational companies.

In a letter to the Department of Industrial Policy and Promotioin on January 7, health secretary K Chandramouli had pointed out that his ministry was worried about the takeovers of Indian pharma firms by multinationals.

Chandramouli in his letter had said that there was a risk of the essential medicines getting expensive as the companies foreign companies may introduce costlier version of drugs that were currently sold at a cheaper rate by the Indian companies.