India's foreign-investment regulators indicate they are considering action to tighten restrictions in the pharmaceutical sector in the face of foreign funds continuing to be used to buy existing companies instead of creating new ones.
The Department of Industrial Policy and Promotion (DIPP) reportedly is reviewing its policy of unrestricted investment in the industry, according to The Hindu Business Line. The DIPP has to clear all investments in existing "brown-field" operations, but there is no limit on the percentage of ownership it can allow.
The Hindu newspaper quoted a DIPP official as saying the agency was examining whether the current policy has affected generics production and availability. He also noted the policy ban on non-complete clauses in merger deals does not apply to takeovers, leaving the agency without the ability to provide safeguards.
A draft of a proposal being prepared for ministerial review noted that 90% of pharmaceutical FDI in India is in existing brown-field projects, much of it comprising buyouts by international giants.
- here's the story from The Hindu Business Line