he Foreign Investment Promotion Board( FIPB) has cleared seven out of the ten FDI proposals

17.8 per cent during the five-year period 2003-04 to 2007-

08. The Indian domestic pharmaceutical market size is estimated at US $ 10.76 billion in the year 2008 and was

final Foreign Direct Investment( FDI) policy in the

expected to grow at a high CAGR of 9.9 per cent till 2010

pharmaceutical sector. The FIPB, at its meeting held

and thereafter at a CAGR of 9.5 per cent till 2015. With

recently, deferred three proposals for FDI while clearing the

these changes many Indian domestic drug companies have

seven, according to official sources. The cases were kept in

achieved global success. Many of these drug companies

suspension till the review process on the policy is finalized.

supply medicines to around 200 developing countries all

But will the FDI in pharmaceutical sector quietly

over the world at affordable price.

cleared by the UPA government, not hit the common man ' s

The FIPB, headed by Department of Economic

pocket sooner than later. Patents are the rights that are

Affairs Secretary ArvindMayaram, discussed 30 Foreign

granted by the state under the assumption that the inventor

Direct Investment( FDI) proposals, including 10 from

has spent resources for doing innovative research. Rights

pharma sector. The proposals which were discussed in the

are then granted for a certain period of time and during the

meeting included that of Singapore ' s GlaxoSmithKline,

given period, the patent owner alone is the sole

USA ' s Mylan Inc., Mauritius-based Castleton Investment,

manufacturer of the drug and can thus determine and fix the

Mumbai- based Ferring Therapeutics and Hyderabad-based

price of it. There are patent laws that are enacted by the

Verdant Life Sciences. There were indications that all the

government and amended as and when necessary.

proposals would be deferred till a final policy is announced

India changed its Patent Act in 1970 and before that

after the ongoing review by the DIPP. Currently, India

we had a Patent Act that was crafted by the British to make

permits 100 per cent FDI in pharma sector through

profit for its country. In 2005, India made one major

automatic approval route in the new projects but the foreign

amendment in its Patent Act by changing the duration of

investment in the existing pharma companies are allowed

patent period to twenty years, which earlier was for seven

only after FIPB ' s approval. The Department of Industrial

years. In addition, India made another important

Policy and Promotion( DIPP) had earlier raised concerns

amendment-- changed from ' process patent ' to ' product

over spate of acquisitions of domestic pharma firms by

patent '. In the process patent, another process can be used

multinationals. The Department had also asked the Finance

to manufacture the same drug but not in product patent.

Ministry to defer the proposals. FDI policy in the sector has

Both these changes along with a host of others were done at

already been discussed at the Prime Minister ' s level in

the behest of the World Trade Organization. The period of

December last year. Accordingly, all foreign investments in

35 years from 1970 to 2005, equipped with shorter patent

existing domestic pharmaceutical firms were allowed only

period( seven years) and the process patent, Indian drug

after clearance by the FIPB. Since April 2000, FDI of US

companies have achieved a phenomenal global success.

$ 10.3 billion has come into the pharmaceutical sector,

According to the ministry of commerce and industry,

nearly five per cent of the total foreign inflows the country

Government of India, report of the task force of December

has received. On an average about 25 per cent of the FIPB

12, 2008“ The Indian pharmaceutical sector is emerging as

agenda is related with pharmaceutical sector. The

one of the major contributors to Indian exports with export

government has constituted a high-level committee to take

earnings rising from a negligible amount in early 1990s to

a fresh look at the FDI policy. This is a welcome move.

Rs 29,139.57 crore( US $ 7.24bn) by 2007-08. The exports of

drugs, pharmaceuticals and fine chemicals of India have

grown at a compounded annual growth rate( CAGR) of