Commerce and Industry Minister Anand Sharma, whose ministry formulates foreign direct investment norms, also proposed tightening rules so that Indian acquisitions by MNCs flow through it instead of the automatic route now.
In a communication, Sharma requested Ghulam Nabi Azad, his counterpart in Health Ministry, to examine a discussion paper on "Compulsory Licencing" -- a system whereby a third party other than the patent holder is allowed to produce and market a patented product or process- for formulating a "coherent and concerted approach".
"While, it is generally agreed that we need to strike a balance between the interests of inventors and those of consumers, the imperative of providing affordable health care assumes a different direction," Sharma said in the letter to Azad.
Detailing the legal provisions and other related aspects of patenting laws in India and developments in rich countries including the US, the discussion paper talks about the spread of serious diseases like HIV and cancer and the high costs and availability of potent medicines.
Asked to comment on the discussion paper, which seeks views from all stakeholders by September 30, industry chamber Assocham's President Swati Piramal, whose Piramal Healthcare just sold its domestic formulation business to US-based Abbot for USD 3.7 billion, disagreed with Sharma's view.
The Piramal deal was the second biggest acquisition of an Indian drug firm. In 2008, the country's largest drug maker Ranbaxy was acquired by Japan's Daiichi Sankyo for USD 4.6 billion.
"I don't think mergers and acquisitions will affect the prices of drugs. There is a lot of competition and no company can afford to increase prices... There are over 50 manufacturers for a single molecule," she said.
In his letter to Azad, the Industry Minister said acquisition of Indian pharma firms by MNCs in the recent past had led to "the articulation of public concerns on its impact on the availability of low costs medicines.
"It has also triggered a debate in various quarters, specially about the affordability of life saving drugs not only in India but in the rest of the developing world."
Stating that 100 per cent FDI was allowed through automatic route in the sector as of now, the Industry Ministry discussion paper said: "This could be shifted to government route so that proposals for mergers and acquisitions in this important sector could be scrutinised."
