FDI IN PHARMACEUTICAL SECTOR

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

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Tel [phone] Fax [phone]
1201 E-mail info_at_maheshwariandco.com Website
www.maheshwariandco.com
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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

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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.

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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

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Indian Pharmaceutical Evolution
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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

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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

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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

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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

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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
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Top Publicly Listed companies in India
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