Prime Minister steps in to clear Mylan's $1.6 billion deal

The author has posted comments on this articleTNN | Aug 17, 2013, 06.16AM IST

NEW DELHI: PM Manmohan Singh on Friday paved the way for clearing pending foreign investment proposals, including Mylan's deal to acquire Strides Acrolab for $1.6 billion (around Rs 10,000 crore), and overruled the stiff opposition put up by the department of industrial policy and promotion (DIPP).

"There are some concerns particularly in regard to oncology injectibles, some of the vaccines where we feel that critical needs must be met at all costs... The present proposals before the FIPB, or as approved by it, will go through under the existing policy. And if there are safeguards required, that will be discussed," commerce and industry minister Anand Sharma said after a meeting convened by the Prime Minister.

FIPB's clearance to 12 proposals, involving investments of around Rs 350 crore had been put on hold as DIPP insisted that the FDI policy be reviewed. On the department's insistence, the government had for the first time reduced the flexibility offered to investors in the pharma sector and mandated that all transactions in existing Indian drug companies should be vetted by FIPB, if the acquisition involved transfer of over 49% stake. The change took place after promoters of Indian companies such as Ranbaxy and Piramal Healthcare sold their shares to global pharmaceutical companies. DIPP has argued that such deals would impact availability of affordable drugs in the country.

The PM's intervention comes at a time when the government is pushing to attract overseas flows to finance the widening current account deficit. Although transactions in the pipeline have been cleared, Sharma said the policy would undergo a change. The commerce and industry ministry would soon start a consultation process to address "dangers inherent" in the current model of FDI in brownfield pharma units. Sharma said the government will discuss safeguards to ensure "affordable, life-saving medicines are available to the people".

As part of the proposed changes, the health ministry would be asked to suggest whether any specific critical vertical in the sector should be retained only with the Indian companies in case of M&As. A main concern raised in the meeting was how to prevent multinationals from changing product mix from generics to branded generics or patented ones after acquiring Indian companies, which could impact the cheapest price generic for the Indian population.

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