GlaxoSmithKline, Ranbaxy among hardest hit in Indian price cuts

India's skeptical patent regime is only one of pharma's worries in the country. New price controls are on their way, and brokerage house HSBC has identified which companies are most likely to suffer from the cuts. Meanwhile, regulators are once again looking at new hurdles to foreign investment, inspired by another round of pharma dealmaking.

Those price controls, which affect 348 drugs designated as "essential medicines," will hit GlaxoSmithKline ($GSK) hardest among Big Pharma. Domestic drugmakers Cadila Healthcare and Cipla--plus Ranbaxy Laboratories, majority-owned by Japan's Daiichi Sankyo--are also expected to take a hit. India's Sun Pharma and Lupin will escape the brunt of the price cuts, MoneyControl says.

Meanwhile, the Department of Industrial Policy and Promotion (DIPP) is asking India's prime minister to revisit the rules on foreign investment in the pharma sector, the Economic Times reports, citing sources. After a long debate, last year the country changed foreign investment rules to require government approval on foreign puchases of domestic drugmakers. Deals involving new projects don't require upfront approval.

Since then, several foreign companies have applied for approvals, and four of the latest proposals have the DIPP worried about foreign investment again. U.S.-based Mylan ($MYL) is involved in two of those, while Japan-based Terumo filed another. One official told the ET that "the policy needs to be relooked at the highest level."

The original debate arose after a series of deals took Big Pharma deeper into the Indian market. Daiichi bought its stake in Ranbaxy, for one, and Abbott Laboratories ($ABT) snapped up Piramal Health Care's domestic drug business to become India's biggest drugmaker. Big Pharma has been targeting India, one of the fastest-growing drug markets, for its own expansion, as business in more mature markets slows.

- read the MoneyControl story
- get more from the ET