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New pharma policy soon, to cut price controls

India will soon announce a new pharmaceuticals policy that will reduce government price controls and relax foreign ownership norms, a government source said on Thursday.

"We want to place the proposals before the cabinet as early as possible, ideally by the end of February," the source said, speaking on condition of anonymity.

Currently the government imposes strict price controls on over 70 drugs.

"The span will reduce -- fewer drugs will be covered by price controls," the official said.

Indian drug prices are among the lowest in the world, and successive governments have been loath to tinker with price controls as a large portion of the population cannot afford even marginally higher prices.

Multinational companies like Glaxo India Ltd, Hoechst Marion Roussel Ltd and E Merck India Ltd, which have large portions of their turnover from products under price control, would benefit from any relaxation.

Indian drug companies are less affected because they typically make more products which are outside the controls.

The official said the new policy is likely to allow 100 percent foreign ownership, without prior approval of the Foreign Investment Promotion Board (FIPB). Currently only foreign ownership up to 74 per cent is covered by this automatic route.

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