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Jun 23, 2012, 05.56 PM IST
The inter-ministerial group that was set up to clear FDI in pharma brownfield projects has come out with stringent guidelines that could impact pharma mergers and acquisitions in India, reports CNBC-TV18's Ronojoy Banerjee.
The inter-ministerial group that was set up to clear FDI in pharma brownfield projects has come out with stringent guidelines that could impact pharma mergers and acquisitions in India, reports CNBC-TV18’s Ronojoy Banerjee.
The inter-ministerial group (IMG) met on June 4 under the instruction of Commerce Minister Anand Sharma because there were a lot of health concerns that were raised by the Department of Health Minister Ghulam Nabi Azad. At that meeting which was attended by officials of DIPP, health ministry and the pharma department, very stringent proposals had been recommended.
They said that incase of those Indian companies which have had an FDI infusion, the level of generic drugs must not fall below the average of the generic drug level in the last five preceding financial years. In this case, the health department is going to come out and clearly define what the level would be but sources say that the level is likely to be defined as a percentage of the total turnover.
But the most interesting proposal that they have made is they have said that once these companies have had FDI infusion, the investments in R&D in those diseases that are relevant to India should go up by more than 5 percentage points. One can only wonder what those diseases relevant to India are which is the term the IMG has proposed.
Pharma M&A which has been one hot space as far as the merger and acquisition space is concerned, seems likely to be a major setback because these proposals for the market will be very difficult to follow. On June 26, the IMG is going to meet once again and take a final call on that.
The IMG wants to ensure that the level of generic drugs for domestic use does not to fall below the average of the last five fiscal years.
The IMG has also proposed replacing the term 'generic' with 'NLEM' or National List Of Essential Medicines, a move that will ensure availability.
Tags: FDI in pharma brownfield projects, Ronojoy Banerjee, Pharma M&A, Ghulam Nabi Azad, health concerns, National List Of Essential Medicines
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