Indian pharma M&A may soon need official OK

Ever since Abbott Laboratories ($ABT) snapped up Piramal Healthcare's drug business, the Indian government has been debating restrictions on foreign investment in domestic pharma. After all, that deal propelled Abbott to the top spot in India's drug business overnight. Local pharma types complained. Some health officials worried about potential increases in drug prices. Controversy ensued.

So, government ministers started to rethink the existing policy of automatic, 100% approval of direct foreign investment in drug companies. The most strident complainers had suggested a cap on foreign investments, but commerce ministry officials asked Ernst & Young for some alternate ideas.

Sources now tell the Economic Times that officials are considering a new policy that would require case-by-case approval of pharma takeovers. The policy would require pharma deals to be reviewed by the country's Foreign Investment Promotion Board. The FIPB might attach conditions to its approval: technology transfer, for instance, or commitments to build up manufacturing or R&D infrastructure, the ET reports.

- read the ET coverage

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