MNC buyoffs may send drug costs soaring

New Delhi: The price of India-made low-cost generic drugs could be sky high soon. The Union health ministry's internal assessment suggests, the recent buy-offs by multinational companies of Indian firms making generic drugs will reduce domestic availability of many essential medicines that were earlier manufactured and sold by the acquired firms. 

    The emergence of a monopolistic pattern is likely to increase domestic drug prices. The foreign MNCs had raised their share of the domestic market from 15% to 25% five years ago. 
    Alarmed at the weakening competition, the health secretary has asked the commerce ministry to bring FDI in the pharma sector through the "Foreign Investment Promotion Board route" only in case of "brown field projects" (acquisition of already established Indian companies by foreign entities in the drugs and pharma sector where such a transfer leads to a change in ownership pattern). Health secretary K Chandramouli writes, "We are extremely apprehensive the take over of these Indian pharma companies by the MNCs would result in their gaining market supremacy. Essential medicines are bound to become costlier. It is high time to make MNC takeover norms stricter." 
    As per the rule, whenever a MNC wants to take over an Indian generic drug-making firm, it has to first apply to the FIPB, who will look at what impact the acquisition would have for India's public health sector. This has led to a spate of buy-offs of Indian companies, whose effect would be felt when 61 drugs worth over $80 billion go off the patent list in the US between 2011 and 2013. Once the drugs go off the patent list, domestic companies would be able to produce their cheaper variants. But if MNCs buy them, the price would still be high.