Government may set policy to discipline pharmaceutical M&As

With the spate of mergers and acquisitions (M&As) in the pharmaceutical sector creating apprehensions about prices rising and Indian

drugmakers losing their edge, the government is likely to work on a policy for disciplining the sector.

Though the policy intervention is likely to happen only towards the year-end, the government — through its agencies — is said to have come to an opinion that the taking over of Indian companies by multinational companies (MNCs) is likely to put Indian consumers at a disadvantage, though the companies would improve their financials.

“The government is keen on looking at the entire M&A episode from the Indian perspective. There are two aspects that are coming up for close examination — the MNCs after taking over the Indian company will work as per their global plan and there would be nothing specific to India in it.

Secondly, the pricing of drugs too would be different and it might as well go beyond the affordability of Indian market,” a senior official in the ministry of commerce said.

For now, the government, through its arm the Pharmaceutical Export Promotion Council (Pharmexcil) and global consultancy major Ernst & Young, has commissioned a study on the 5-6 major M&A deals in the sector, evaluating their implications on the Indian market.