India: Gov’t seeks to clarify M&A regulations in pharma sector

While the government has declared that the Foreign Investment Promotion Board will be the gatekeeper for clearing foreign investments in Indian pharmaceutical companies, amendments to the Competition Act to explicitly provide legislation for the FIPB’s new authority have not yet been finalized. The government has said that the FIPB will review any proposals for foreign investment until those amendments to the Competition Act have been made. The strategy is part of an effort to ensure affordable prescription prices. While all foreign investment was initially permitted automatically, meaning that investors did not need government clearance, Prime Minister Manmohan Singh had attempted to remedy the situation by suggesting all foreign investment proposals first go to the FIPB for six months and then to the Competition Commission of India; upon discovery that the CCI did not hold this jurisdiction, all foreign direct investment deals were put on hold. While deal clearances have begun again, a source says the plan is to ensure the manufacturing of essential drugs by those who acquire Indian firms until the CCI is allowed to review the acquisition after amendments have been made.