FIPB gives nod to eight pharma FDI proposals

New Delhi: India's foreign investment approval authority has cleared eight pending proposals of foreign drug companies to buy stakes in local companies which have been pending for several months due to lack of clarity on the new FDI norms for pharmaceuticals sector.

The eight proposals that the Foreign Investment Promotion Board (FIPB) cleared at its meeting on Friday include those of Pfizer Limited, B Braun, Sutures India and Ordain Health Care Global, two government officials who attended the meeting told ET.

Sutures India's plans to raise Rs 199 crore by selling 40% stake to Mauritius-based Ambrose Pvt Ltd and Spain's Chemo Group's proposal to buy a 100% stake in Ordain Healthcare Global for Rs 58 crore have been stuck since March.

Organisation of Pharmaceutical Producers of India (OPPI), the lobby body of foreign pharma companies in India, has welcomed the move.

"This is a one small step for encouraging FDI in India," said OPPI president Ranjit Shahani, adding that similar delays should not be repeated for future investments. The FIPB, however, deferred two fresh proposals of Advanced Enzyme Technologies and UK-based Dashtag. But this was because the health ministry did not get their applications and were not related to the new guidelines, one of the officials said.

Foreign investment in pharmaceuticals came to a standstill last year delaying expansion plans of foreign drug makers after the government decided to impose conditions holding up Rs 3,000-crore worth of FDI proposals.

The restrictions were raised after health ministry, some parliamentarians, NGOs and section of the industry expressed fears that the spate of buyouts by multinationals in recent years would threaten availability of low-cost medicines for Indians and increase dependence on costly imported drugs. Only few FDI proposals in the sector, mainly financial investments have been approved since then.

In last four years, MNCs have bought out several Indian firms which include Daiichi Sankyo's purchase of Ranbaxy and Abbott's buyout of domestic formulation business of Piramal Healthcare.

An inter-ministerial panel had finalised the new FDI guidelines for the pharmaceuticals industry in July paving the way for clearing the backlog. The panel suggested conditions such as commitment by the buyer to manufacture and make available essential drugs post acquisition for five years and also to increase R&D expenditure by 5% for diseases prevalent in India to allow foreign firms buy Indian companies. It left it to DIPP to decide if the riders be imposed only for acquisition of more than 49% or management control. The new guidelines are awaiting approval of PMO. But FIPB meeting that was held three days later decided to put off FDI proposals in pharma sector.