Pharma FDI: Panel for urgent reversal Joe C Mathew / New Delhi, November 23, 2011

An expert group, set up by the Planning Commission, has called for an “urgent” reversal of the current position on foreign direct investment in the pharma sector. The panel wants foreign drug multinationals to bring down their stake in the Indian subsidiaries to 49 per cent, even as another committee — headed by Planning Commission member Arun Maira — had recently sought the continuance of 100 per cent FDI in the pharmaceutical sector. The Commission’s high-level expert group, or Help, is headed by Srinath Reddy, president, Public Health Foundation of India. Among its 17 members figure a Planning Commission representative: N K Sethi, who is former senior advisor of the Commission. The other Help members include representatives from the health ministry besides public health organisations and civil society groups.

The report, to be submitted to Deputy Chairman of Planning Commission Montek Singh Ahluwalia on November 28, talks about an urgent need to “revisit India’s FDI regulations to amend the present rules of an automatic route of 100 per cent share of foreign players in the Indian industry to less than 49 per cent, so as to retain predominance of Indian pharmaceutical companies and preserve self-sufficiency in drug production”.

WHAT THE PANELS SAY

EXPERT GROUP OR HELP MAIRA COMMITTEE An expert group or Help, set up by the Planning Commission, wants foreign drug multinationals to bring down their stake in the Indian subsidiaries to 49 per cent

Another committee headed by Planning Commission member Arun Maira had recently sought the continuance of 100 per cent FDI in the pharmaceutical sector

The report of this group, headed by Public Health Foundation of India President Srinath Reddy, talks about retaining predominance of Indian pharma firms and preserving self-sufficiency in drug production

The panel had the mandate to see the impact of FDI in pharmaceuticals in the context of increasing mergers and acquisitions in the domestic drug industry

It is against 100 per cent FDI in pharmaceuticals and been working to prepare a universal healthcare model that is accessible to all citizens

Formed in June this year, the committee also had the mandate to turn India into a global pharmaceuticals manufacturing and research hub

The Maira Committee — formed in June this year — had the mandate to see the impact of FDI in pharmaceuticals in the context of increasing mergers and acquisitions in the domestic drug industry and the need to turn India into a global pharma manufacturing and research hub. On the other hand, the Help, which is against 100 per cent FDI in pharmaceuticals, has been working for more than a year to prepare a universal healthcare model that is accessible to all citizens of the country. The Reddy panel also wants to strengthen the capacity of the public sector for the manufacture of

domestic drugs and vaccines. The “central and state governments should assist and revive public sector units that manufacture generic drugs and vaccines, limit the voting rights of foreign investors in Indian companies, and take other measures to retain and ensure self-sufficiency in drug production”, it has recommended.

The report also talks about the importance of issuing compulsory licenses to make available, at affordable prices, all essential drugs relevant to India’s disease profile.

The panel has recommended a national health package for all citizens, irrespective of their financial status through public sector as well as contracted-in private facilities, including non-profit organisations and NGOs. Under the proposed package, citizens will also be allowed to supplement free-of-cost services (both in-patient and out-patient care) offered under the universal health coverage (UHC) system by paying out-of-pocket or directly purchasing additional private voluntary medical insurance from regulated insurance companies.

Financing the proposed UHC system will require public expenditures on health to be stepped up from around 1.2 per cent of today’s gross domestic product to at least 2.5 per cent by 2017 — and to three per cent of the GDP by 2022. Only recently had the government accepted the Maira panel report and decided to maintain a status quo on its FDI policy in pharmaceuticals. Based on the committee’s recommendation, the government also decided to route all pharmaceutical M&A clearances through the Competition Commission of India, irrespective of the size of the deal.