Title: FDI IN PHARMACEUTICAL SECTOR
1- FDI IN PHARMACEUTICAL SECTOR
- Submitted by
- MAHESHWARI CO.
- Advocates and Legal Consultants
2Tel 91-11-2610 1906 Fax 91-11-2617
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3Key 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 -
4Foreign 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.
5Permissible 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
6Indian Pharmaceutical Evolution
7Indian 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
8FDI 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
9Impact 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
10Government 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
11SWOT 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
12Top Publicly Listed companies in India
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