Foreign direct investment in the pharma sector has more than doubled to $1.07 billion during April-August period amid concerns over increasing acquisitions of domestic firms by multinationals.
FDI in drugs and pharmaceuticals was $487 million during April-August 2012, according to the latest data of the Department of Industrial Policy and Promotion.
Faced with rush of multinationals to acquire Indian pharma firms, the Commerce and Industry Ministry is proposing to tighten the foreign direct investment policy for the sector by incorporating conditions like mandatory investment in research and development and non-compete clause in the shareholders pact.
Over 96 per cent of the total FDI in the sector between April 2012 and April 2013 has come into brownfield pharma.
"The continuous acquisition of Indian pharma companies will severely impact the availability and affordability of generic
medicines in the country," an official said.
The ministry is floating a cabinet note to include major changes in the FDI policy in the sector to protect domestic generic (off-patent) firms.
The government has recently cleared a Rs 5,168-crore (Rs 51.68 billion) proposal of US-based pharma firm Mylan Inc's to acquire Indian generic drugs company Agila Specialties.
Other big recent acquisitions include Shantha Biotechnics by French pharma company Sanofi-Aventis.
In 2008, Japanese firm Daiichi Sankyo had bought out the country's largest drug maker Ranbaxy for $4.6 billion.
India allows 100 per cent FDI in pharma sector through automatic approval route in the new projects, but foreign investment in the existing companies are allowed only through the FIPB (Foreign Investment Promotion Board) approval.
Other sectors which received high FDI during the period include services ($1.19 billion), automobile ($661 million), construction ($592 million) and chemicals ($ 359 million).
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Foreign direct investment in the pharma sector has more than doubled to $1.07 billion during April-August period amid concerns over increasing acquisitions of domestic firms by multinationals.