Retail trade in Tamil Nadu opposed to allowing FDI in pharmaceutical business

The Tamil Nadu Chemists and Druggists Association (TNCDA), the body representing retail pharmaceutical traders in the state, has strongly objected to the proposed introduction of foreign direct investment (FDI) on the pharmaceutical retail business sector.

The association has, in a memorandum to the Parliamentary Committee on FDI, said allowing FDI on retail pharma sector would finish off all the retailers from the market and create a situation of non-availability of drugs in rural areas. The foreign players will concentrate on the metros and on big cities and they will not target the rural masses, the traders told the parliamentary panel.

According to N Anandan, secretary of TNCDA, his association would not support the union government for its decision to allow FDI in retail, whereas it would support the state government for its objection against the foreign investment. Anandan said he will raise objection in this regard as he has to protect the interests of 40000 retail chemists in the state. Stating that due to the increasing number of chain stores, the retail pharma sector is now struggling. With opening up of retail sector to foreign companies to invest will totally wipe out the poor pharma retailers from the market.

“The entire retailers will be badly affected. Now all the consumers are satisfied as they get all kinds of drugs in their villages at cheaper rates. The foreign investors will concentrate on businesses in cities and towns. It will expunge the existing retailers from every corner. We are opposing the move of the central government inviting foreign companies through FDI,” he told Pharmabiz.

Recently, the supreme court of India said the interests of small traders should not be affected by FDI in retail. The parliamentary panel consisted of seven members who visited Orchid Chemicals in the morning. The members of Parliament held separate discussions with manufacturers and also met the state health secretary and the drugs control staff.

Pharma FDI cap may be cut to 49%

An inter-ministerial group ( IMG) has suggested that foreign direct investment (FDI) cap in existing pharmaceutical ventures be lowered to 49% from 100% to check takeover of local companies by multinationals, a move which has now been referred for a second opinion to the Planning Commission amid protests from foreign players.

Sources in the government told TOI the panel comprising representatives from the health ministry and pharmaceuticals and industry departments had recommended that in case of brownfield ventures, not only should FDI be capped but these investments should also be approved by the government.

Govt may cut FDI to 49 per cent in pharma industry

The Government is expected to soon take a call on slashing the foreign direct investment (FDI) limit in the pharmaceutical sector in order to bring down the prices of drugs, chiefly essential drugs. It is mulling capping the FDI in the sector at 49 per cent and routing it through the government. Currently, the FDI limit in the sector stands at 100 per cent through the automatic route.

The government fears that 100 per cent FDI will lead to uncontrolled mergers and acquisitions (M&A) by foreign drug firms, which could lead to further increase in drug prices and also cartelisation. "There is a clear indication from the PMO (Prime Minister's Office) and the health ministry to control the escalating drug prices. State governments have also complained about it. We expect to take a call on it soon. May be around the (time of) annual budget," said a senior official at the ministry of commerce and industry requesting anonymity. The ministry formulates FDI norms.