Pharma Buy-Outs by MNCs Won't Result in Price Hikes

Friday, 30 September 2011, 05:04 Hrs
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Bangalore: The world's largest drug-maker Pfizer allayed concerns that acquisition of Indian pharmaceutical firms by multinationals will lead to an increase in drug prices.

"A 100% of pharma products are under price control. There is no way prices can shoot up. So if anybody says the prices can go up, it can go up even without acquisitions. So the (fears of) acquisitions making prices go up is no reality," Pfizer India MD Kewal Handa told PTI.

Pfizer is present in India through its Mumbai-based subsidiary, Pfizer Ltd. Handa said with almost every drug under price control, there is no way that acquisitions of domestic firms by foreign players could lead to a rise in prices.

"We have all checks and balances in place and the only difference is that some of the companies have been acquired. That doesn't mean that the pharmaceutical system has collapsed," Handa told PTI on the sidelines of AIMA summit here.

"Its (demand to cap FDI at 49 percent) without any content. It has more of emotional baggage and without any reality check. I think we have a system in place which controls prices," he added. "If environment is not suitable, lots of companies may hold back their India opportunity," he added.

Some sections in the government like the Health Ministry have suggested that the foreign direct investment (FDI) should be capped at 49 percent in the pharmaceutical sector. However, the Finance Ministry is opposed to the idea and does not want to rollback the policy of 100 percent FDI through an automatic route. The Industry Ministry is also for retention of 100 per cent FDI, but wants all the deals to be scrutinised by the FIPB.

Further, a Planning Commission expert group has recommended that all mergers and acquisitions (M&As) in the pharmaceutical industry should be cleared by competition watchdog CCI to ensure that such deals do not result in monopolies and an increase in drug prices.

The recent buyouts of the Indian firms by MNCs included takeovers of market leader Ranbaxy Laboratories by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care by Abbott Laboratories of the US.

Commenting on the proposal for capping FDI in pharma, Handa said: "It will have a very negative perception definitely about the pharma industry and whatever we are doing not only in the domestic market, but across the peripheral and contract research and manufacturing services (CRMS) and in
formulations developments and so on, so forth... This will have its own impact in the long run."
Source: PTI
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