India's Commerce and Industry Ministry plans to measure the impact of foreign investment on the drug industry in a step that will be closely watched for any conclusions for--or against--more activity in the sector.
The Times of India said the move to hire unnamed academics to conduct the study was prompted over concerns that investments to date have been in existing companies instead of the hoped-for Greenfield projects.
A committee in India's lower house of parliament has suggested banning foreign investment in existing firms and a stronger look at even new ventures, the Times of India said.
"In many countries, takeovers are not allowed in strategic sectors like pharma. For India, affordable healthcare is a challenge and for that access to medicines is important," the newspaper said, quoting an unnamed industry expert.
India does allow up to 100% of foreign direct investment in existing drug companies and new operations, although this is subject to competition and other regulatory approvals.
The study also comes as segments of India's mainly generic-driven drug industry catch more attention in the M&A space from companies abroad.
That includes China's Shanghai Fosun Pharmaceuticals, which said in mid-May it was in the race to buy unlisted Hyderabad-based injectables maker Gland Pharma, joining Baxter International and buyout firm Advent International, for a company valued at around $1.5 billion.
Domestically, the industry is still dominated by players like Sun Pharmaceutical Industries--the world's fifth largest generic firm which bought Ranbaxy Laboratories in 2014 from Japan's Daiichi Sankyo.
The report on the impact of foreign investment is slated to be finished in three to four months, according to the Times of India, adding that the impact of investment on access to low-cost drugs and related patent rules would also be a focus.
Civil groups have questioned recent moves to uphold patents in cases that called into question access to drugs or effective originality. Indian generic drugmakers have also called on the government to ensure they can continue to challenge patents under existing laws.
- here's the story from the Times of India