Deals underscore the importance given by the Indian government to strengthening healthcare in the country, by ensuring availability of drugs to the population at reasonable prices
The Indian Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved two significant foreign investments in the pharmaceutical sector. The cabinet has approved foreign funds to infuse more capital into Aurobindo and Glenmark in two decisions that would result in an inflow of more than US$671m in foreign direct investment into the two pharmaceutical companies.
Approval has been given for Qualified Institutional Buyers (QIB) to infuse fresh equity of up to 7%, amounting to about $347m into Aurobindo Pharma, which is engaged in manufacturing generic pharmaceuticals and APIs. The existing Foreign Institutional Investor (FII) shareholding is 27.32% in the company. This would enable the company to expand its operations in the areas of anti-infective, cardiovascular and central nervous system related ingredients.
Glenmark Pharmaceuticals has increased the foreign investment limit by FIIs from 35.07% to 49%. This would result in an inflow of about $324m. Apart from manufacturing pharmaceuticals, the company is also engaged in R&D activities.
Both companies are required to continue to produce medicines under the National List of Essential Medicines (NLEM) at the same levels as they have been doing in the past. The ruling also mandates that both companies are required to maintain R&D expenditure at the maximum levels incurred in the past three years, and to provide complete information regarding any transfer of technology.
The deals underscore the importance given by the Indian government to strengthening healthcare in the country, by ensuring availability of drugs to the population at reasonable prices. These investments also show the continued confidence of international investors in the domestic Intellectual Property Regime (IPR) in the pharmaceutical sector.