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FDI IN PHARMACEUTICAL SECTOR

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FDI IN PHARMACEUTICAL SECTOR Submitted by: MAHESHWARI & CO. Advocates and Legal Consultants * Tel : 91-11-2610 1906 Fax : 91-11-2617 1201 E-mail : info_at_ ... – PowerPoint PPT presentation

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Title: FDI IN PHARMACEUTICAL SECTOR


1
  • FDI IN PHARMACEUTICAL SECTOR
  • Submitted by
  • MAHESHWARI CO.
  • Advocates and Legal Consultants

2
Tel 91-11-2610 1906 Fax 91-11-2617
1201 E-mail info_at_maheshwariandco.com Website
www.maheshwariandco.com
3
Key Strength to invest in India
  • Strong Manufacturing Base
  • Cost Competitiveness
  • Network of laboratories and RD infrastructure
  • Highly trained pool of scientist and professional
  • Growing biotechnology industry
  • Very strong in Indian medicine systems of
    Ayurvedic, Homeopathy, Unani Siddha and Herbals
    medicines

4
Foreign Direct Investment
  • Comprehensive data with regard to acquisition
    of Pharma companies by multi-national companies
    is not maintained by the Ministry of Commerce
    Industry. However, FDI equity inflows, of US
    341.49 million, have been recorded, under the
    acquisition route, in the drugs and
    pharmaceuticals sector, between April, 2009 to
    February, 2012.

5
Permissible Limits
  • The extant FDI policy for pharmaceuticals
    sector has since been reviewed and it has now
    been decided as under
  • (I) FDI, up to 100 per cent, under the automatic
    route, would continue to be permitted for green
    field investments in the pharmaceuticals sector.
  • (II)FDI, up to 100 per cent, would be permitted
    for Brownfield investment (i.e. investments in
    existing companies), in the pharmaceutical
    sector, under the Government approval route

6
Indian Pharmaceutical Evolution
7
Indian Pharmaceutical Industry
  • Globally, India rank third in term of
    manufacturing pharma products by volume
    thirteenth by value
  • The Indian Pharmaceutical industry is expected to
    grow at a rate of 9.5 till 2015
  • In 2009-2010, India exported drugs worth US7.2
    billion in to the US and Europe followed By
    Central and Eastern Europe, Africa and Latin
    America
  • The Indian vaccine market which was worth US665
    million in 2007-08 is growing at a rate of more
    than 20
  • The retail Pharmaceutical market in India is
    expected to cross US 12-13 billion by 2012

8
FDI BY COUNTRY
  • The largest source of FDI in Indian
    Pharmaceutical Industry in Mauritius. Many global
    investors in India route their FDI through
    Mauritius to take advantage of the
    India-Mauritius bilateral tax treaty

9
Impact of Foreign Investment
  • Indian drug industry has in the last five years
    seen half a dozen big takeovers by foreign
    companies.
  • 3.6 billion acquisition of promoters stake in
    Ranbaxy Laboratories in 2008 by Japans Daiichi
    Sankyo Co. Ltd.
  • US drug maker Mylan Inc. paid 734 million to
    acquire Hyderabad-based Matrix Laboratories in
    2006
  • German health care group Fresenius SE spent 219
    million to take over Dabur Pharma in 2008
  • French drug multinational Sanofi-Aventis SA
    acquired a majority stake in Indian vaccines
    company Shanta Biotech in 2009 for 550 million

10
Government Initiatives
  • The government of India has undertaken several
    including policy initiatives and tax breaks for
    the growth of the pharmaceutical business in
    India. Some of the measures adopted are
  • Pharmaceutical units are eligible for weighted
    tax reduction at 150 for the research and
    development expenditure obtained.
  • Two new schemes namely, New Millennium Indian
    Technology Leadership Initiative and the Drugs
    and Pharmaceuticals Research Program have been
    launched by the Government.
  • The Government is contemplating the creation of
    SRV or special purpose vehicles with an insurance
    cover to be used for funding new drug research

11
SWOT Analysis
Strength Cost Effective Strong Manufacturing Base Availability of high quality skilled workforce Excellent marketing and distribution network Diverse ecosystem Weakness Less investment in research and development Lack of coordination industry and academia. Negligible expenditure on healthcare in the country. Manufacture of fake and low quality medicines
Opportunities Increased export potential. Marketing tie ups with multinational companies to their products in domestic market. Immense scope to position India as a centre for international clinical trials. Key player in global pharmaceutical RD. Export of generic drugs to developed markets. Threats Product patent regime is major threat to domestic industry unless the industry takes up RD initiative aggressively. Drug price control order puts undue pressure on product prices, affecting the profitability of the pharmaceutical companies. The new MRP based excise duty regime threatens the business of smaller pharmaceutical companies
SWOT Analysis
12
Top Publicly Listed companies in India
13
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