Clause on technology transfer in pharma FDI to affect MNCs

In what could come as a major set back for foreign pharma multinationals looking to invest in brownfield projects in India, the high-level committee under Prime Minister Manmohan Singh that met last week on the issue of pharma FDI has re-inserted the clause on technology transfer. According to government sources FIPB, that will clear the FDI proposals in pharma brownfield projects would seek 'complete information' on technology transfer by foreign pharma firms. Ronojoy Banerjee of CNBC-TV18 reports.

Also read: Recent govt actions will not impact pharma sector 'Mandatory technology transfer' was one of the conditions that was proposed by the health ministry at the start for allowing FDI in brownfield pharma projects. Owing to hectic industry lobbying and a lot of opposition raised by certain quarters of the pharmaceutical industry, the inter ministerial group (IMG) was formed earlier this year under the chairmanship of commerce minister Anand Sharma. At that point in time this clause, which many felt was contentious, was dropped. Sources say, following last week's meeting on the issue of pharma FDI, which was headed by Prime Minister Manmohan Singh, this condition has been reinserted. It does not however use the word 'mandatory'. It says that one of the conditions that the FIPB will have to follow before approving any pharma investment in brownfield projects would be to seek complete information of technology transfer into the investment company. So, it’s a matter of waiting and watching how the industry reacts to it. Most of pharma companies believe that this could impact mergers and acquisitions (M&A) in this sector.