The parliamentary standing committee on Tuesday recommended to impose a blanket ban on foreign direct investment (FDI) in brownfield (existing) pharma projects, or ones in which stake is acquired in an existing company.
Citing that FDI in brownfield pharma sector has encroached upon generics base and adversely affected India’s pharma industry, the committee strongly recommended to restrict FDI in existing pharma projects even as it agreed with the present FDI policy on greenfield pharma projects permitting upto 100 per cent under automatic route. The committee also pushed for stricter norms with regard to take over of Indian pharmaceutical companies by multinational companies (MNCs).
Convinced that FDI has failed to bring about any change in the existing pharma R&D environment as domestic pharma companies are still to gain the competence and capacity to achieve cutting-edge drug innovation, the committee headed by Shantha Kumar suggested that the department take all measures to stop any further takeover/acquisition of domestic pharma units. “This necessity becomes more telling in view of the fact that the pharmaceutical industry is not like any other industry/business. It is one sector of the economy which has to be dictated by public good rather than foreign investments, profit and revenue,” said the report. The committee, nevertheless, desired that the department undertake consultations with all stakeholders to create favourable conditions to promote greenfield investments in pharma sector. It also viewed that FDI in green field pharma projects may be automatic but subject to some conditions. “It must be ensured that the failure to comply with provisions should attract penalty.
, including cancellation of registration. Foreign investors must also bring in new technology for local production of active pharmaceutical ingredient manufacturing from basic stage,” added the report. It said the FDI flow into brownfield projects has not added fresh capacity in terms of production, distribution network or asset creation to the desired level.