100% FDI in pharma sector bad for country: Parl committee

The Parliamentary Committee on Commerce on FDI in the pharmaceutical sector has asked the government to impose a blanket ban on foreign investment in brownfield pharma projects.

G Pramod Kumar December 20, 2014 21:41:49 IST
100% FDI in pharma sector bad for country: Parl committee

The Parliamentary Committee on Commerce on FDI in the pharmaceutical sector has asked the government to impose a blanket ban on foreign investment in brownfield pharma projects.

The experience of the country so far shows that foreign investment poses direct threat to the "entire health and IPR framework of our country in terms of access and affordability of medicines, domination and elbowing out of our pharmaceutical industry, undue demand and pressure on TRIPS arrangements" the report that was tabled in both houses of Parliament on Tuesday said.

The Committee "strongly" recommended that the government should take steps to stop further acquisition of pharma units by foreign companies. "The pharmaceutical industry is not like any other industry/business. It is one sector of the economy which has to be dictated by public good rather than foreign investments, profit and revenue."

The Committee's conclusions and recommendations unequivocally echo the concerns of the health activists in the country that MNCs and FDI in the pharma sector would make healthcare more inaccessible to Indians. It clearly endorses the widely held view that 100 percent FDI in the sector is a ploy to throttle the homegrown advantage of Indian companies through takeovers and subsequent change of priorities.

100 FDI in pharma sector bad for country Parl committee

A pharmacist sorts free medication provided by the government, which will be given to patients, at a government hospital in Chennai. Image used for representational purposes only. Reuters

Wily nilly, the FDI interest will not help India, but will kill the country's generics, contribute nothing to research, focus on high-yielding products and ultimately rollback the public health gains that the country's small and medium companies have made.

If the situation continues, the Committee expressed the fear that "MNCs would cause us to relapse to the pre-1970 era when we imported 80 percent of our drugs requirement and the prices of these drugs were costlier than what prevailed in USA." All efforts made at that time for purchase of technology from pharma MNCs had failed.

The MNC presence is not only bad for the domestic health scene, but also for exports, the Committee said, further establishing that total FDI in the sector is detrimental in every way because the priorities of the investors are at variance with the needs of the country. FDI has "failed to bring any real change," noted the report.

After all these years of FDI, India still doesn't have the capacity for new drug discovery.

"A developed indigenous pharmaceutical industry is the sine qua non for ensuring affordable quality medicine to people at large and the Government must take all policy measures to develop and sustain a robust domestic pharmaceutical sector in the country."

The 166 page report is an excellent analysis on access to medicine and healthcare in India and comprises issues such as generics vs branded drugs, the pressure by lobbies on India's rightful TRIPS flexibilities, and the need for universalisation of healthcare and a robust drug industry that will make public health more accessible.

The report clearly supports the need for a universal healthcare system, that the UPA promised under the 12th Plan, but dragged its feet on. It said 68 percent of Indians still don't have access to free healthcare.

The report said that out of the 67 FDI investments till September 2011, only one was in green field while the rest in brown field projects. The latter have been predominantly used for mergers and takeovers. However the RBI didn't distinguish between greenfield and brownfield in terms of its record of FDI flows, which was a handicap for the government to devise appropriate policies. It also wanted the department of pharmaceutical industry to be brought under the health ministry.

The Committee also wanted the Competition Commission to play an active role to avoid unfair games by the MNCs, and India to use TRIPS safeguards and Patent Act (eg by issuing compulsory licenses) more vigorously to keep drug-prices low. "The availability of patented drug to the needy is more important than the interest of the patent holder."

Some factual highlights on Indian pharma sector from the report

• As per data recently published by the Department of Commerce, there are more than 350 manufacturing sites endorsed by EU for good manufacturing practices (GMP)

• The Indian pharmaceutical industry produces drugs worth Rs 1 lakh crore (US$ 20 billion) out of which exports account for about Rs 42000 crore and domestic consumption Rs 58000 crore.

• The country meets 95 percent of its domestic demands through indigenous production covering almost all therapeutic categories

• India exports drugs to more than 200 countries and vaccines and bio-pharma products to about 151 countries. The export growth rate is around 10 percent per annum. The major chunk of exports relate to generic drugs which India has been able to offer at competitive rate while maintaining desired quality. It is worth noting that over 55 percent of drugs are being exported to highly regulated markets.

Read the full report here.

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