India opens up its drugmakers to foreign investment

Even as Big Pharma watches a critical patent fight in India to see how restrictive the country intends to be, there was an indication the country would again welcome outside investments in the domestic industry.

Without being specific about all of the investments, the Indian finance ministry claimed it had approved $333 million in investments by foreign companies, Reuters reports. The release of the logjam came after India's economic growth hit a three-year low.

In 2010, Abbott Laboratories ($ABT) bought Mumbai-based Piramal Healthcare's Indian business for $3.72 billion. And Japan's Daiichi Sankyo laid out $4.2 billion in 2008 to get controlling interest of India's giant generics maker Ranbaxy Laboratories. But public opinion turned against outsiders as the concern grew they would pump up drug prices in a country where much of the population is still in deep poverty.

The approvals come on the heels of a government decision to permit foreign investors to own up to 49% of established Indian firms. The current rule allows allows outside investors to start a company in India but requires approval before outsiders can get a piece of a domestic drug company. Those requests have been stagnant for months now.

A condition of the investments, Reuters says, is that drugmakers cannot stop making any cheap drugs they currently produce and they will have to keep investing in R&D with Indian partners for 5 years. The news service said Pfizer ($PFE) and Germany's B. Braun fall into that category.

Big Pharma is trying to figure out its place in India, a growing market with huge potential, but with a populist view of how business should sometimes work. The investment news comes on the same day that a trial began in India over the denial of a patent for Novartis ($NVS) cancer drug Gleevec. Companies will use the outcome of the case to gauge how well protected their intellectual property may be. It also will be an indication of how much they might be able to earn in a country with huge potential, but whose entire drug history is steeped in making cheap copies of Big Pharma's products. India also is talking about putting in new price caps on branded drugs, another new concern for branded drugmakers.

- read the Reuters story 

Related Articles:
Novartis swings for fences in battle over Gleevec patent in India 
New Indian price caps would raise another hurdle to Big Pharma 
Novartis, India face off over patent-protection future there

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