PRESENTED BY:Swarna J,13PMM458,1 st Semester,Dept. Of Pharma. Management,NIPER.

INTRODUCTION World is perceived as a global village

Globalization is the integration of economies of world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge.

Globalization implies opening up of the economy to Foreign Investment by providing facilities to foreign companies to invest in different fields of economic activity.

Globalisation has made markets highly competitive and there is remarkable growth of new service products

OBJECTIVES: Expansion Strategy : Companies start investing because

they want to make their product world available.

New Source of demand : In many situations growth is

restricted in the home country because of intense competition or due to unfavorable market conditions.

Low cost production : In many countries the cost of production is low because of raw materials, availability of man power etc.

Economies of scale : if a large scale of a production is done than the ratio of wastage comes down and the cost reduces

CLASSIFICATION

Foreign Investment

Direct Investment

(FDI)

Wholly Owned Subsidiary

Joint Venture

Acquisition

Portfolio Investment

(FPI)

Investment By

FIIs

Investment In GDRs,ADRs.

FDI AND FIIForeign Direct Investment (FDI):

FDI is a direct investment into production or business in a country by an individual or

company of another country, either by buying a company in the target country or by

expanding operations of an existing business in that country.

According to the IMF , FDI is the category of international investment that reflects the

objective of a resident entity in one economy obtaining a ‘lasting interest’ and control in an

enterprise resident in another economy.

Foreign Institutional Investment (FII):

FII denotes all those investors or investment companies that are not located within the territory

of the country in which they are investing.

“SEBI’s definition of FIIs presently includes foreign pension funds, mutual funds,

charitable/endowment/university funds etc. as well as asset management companies and other

money managers operating on their behalf.”

TYPES OF FDI:

Green field investment

Brown field investment

Joint Venture

FDI POLICY Objective - Encourage FDI, to promote industrial & socio-economic

development; supplement domestic capital/ technology.

Foreign investment in India is regulated by Government of India’s FDI policy

The FDI guidelines administered by the Ministry of Commerce and Industry.

Department of Industrial Policy & Promotion (‘DIPP’), Foreign Investment

Promotion Board (‘FIPB’) and Secretariat of Industrial Assistance (‘SIA’)

regulate the FDI Policy.

Foreign Investment Implementation Authority (FIIA) facilitates quick translation of FDI approvals into implementation.

FDI allowed 100% investment in green field and brown field investment in 2013 policy.

FDI POLICY 2013:

Routes of entry:

Prior Permission(FIPB)

Investing in India

By ExceptionPrior Government Approval needed.Decision generally within 4-6 weeks

Automatic Route

General RuleNo prior permission requiredInform Reserve Bank within 30 days ofinflow/issue of shares

FDI PROHIBITED SECTORS

Atomic EnergyLottery businessGambling & BettingChit fund and Nidhi companyTrading in Transferable Development RightsReal Estate business or construction of

Farm HousesSectors not opened for private sector

investments

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

FDI In Flow

4029 6130 5035 4322 6051 8961 22826 34835 41874 37745 34847 46847

% INCREASE

0% 52% -18% -14% 40% 48% 146% 53% 20% -8% -8% 34%

-0.3

-0.1

0.1

0.3

0.5

0.7

0.9

1.1

1.3

1.5

25007500

1250017500225002750032500375004250047500

40296130 5035 4322

60518961

22826

34835

4187437745

34847

46847

0%

52%

-18% -14%

40%48%

146%

53%

20%

-8% -8%

34%

Financial Year Wise FDI In Flow From

2000-2012

TREND IN FDI INFLOW:

REGULATING AUTHORITES OF GOVT FOR FDI

.

FIPB - The foreign investment promotion board (FIPB) is a government body that offers a single window clearance for proposals on foreign direct investment (FDI) in India that are not allowed access through the automatic route.

CCI - Competition commission of India is a body of the government of India responsible for enforcing the competition act, 2002 throughout India and to prevent activities that have an adverse effect on competition in India

Pharmaceutical industry accounts for about 6% of total FDI into the country.

The Industry has received almost Rs 14,107 crore investment from 36 countries through FDI between April 2011 to Nov. 2011 with most of the fund infusion directed to healthcare and biotech ventures

Almost 82 per cent of the FDI in Pharmaceutical sector was from five countries - Mauritius, Singapore, USA, UAE and Canada.

The increase in FDI Inflows to Drugs and Pharmaceuticals industry in India has helped in the expansion, growth, and development of the industry..

This in turn has led to the improvement in the quality of the products from the drugs and Pharmaceuticals.

Indian drug industry has in the last few years seen half a dozen big takeovers by foreign companies.

FDI IN PHARMACEUTICAL INDUSTRY

FDI BY DIFFERENT COUNTRIES

The largest source of FDI in Indian Pharmaceutical Industry in Mauritius. Many global investors in India route their FDI through Mauritius to take advantage of the India-Mauritius bilateral tax treaty

FDI IN DIFFERENT PHARMA COMPANIES:

SWOT ANALYSIS Strength•Cost Effective•Strong Manufacturing Base•Availability of high quality skilled workforce•Excellent marketing and distribution network•Diverse ecosystem

Weakness•Less investment in research and development•Lack of coordination industry and academia.•Negligible expenditure on healthcare in the country.•Manufacture of fake and low quality medicines

Opportunities•Increased export potential.

•Marketing tie ups with multinational companies to their products in domestic market.

•Immense scope to position India as a centre for international clinical trials.

•Key player in global pharmaceutical R&D.

•Export of generic drugs to developed markets.

ThreatsProduct patent regime is major threat to domestic industry unless the industry takes up R&D initiative aggressively.

•Drug price control order puts undue pressure on product prices, affecting the profitability of the pharmaceutical companies.

•The new MRP based excise duty regime threatens the business of smaller pharmaceutical companies

SWOT ANALYSIS

ADVANTAGES AND DISADVANTAGES OF FDI:

Economic development of a country Increase in competition will lead to the low price of the drugs Resource transfer, in terms of capital and technical knowledge FDI has the potential for job creation and employment Management expertise. Access to international markets World class infrastructure development Transfer of modern technology Help creating a talent pool through international training and

development Meeting unmet needs of patients through innovative medicines Help imbibing the best practices of the world.

ADVANTAGES:-

DISADVANTAGES Inflation may increase. Domestic firms may suffer if they are relatively uncompetitive If there is a lot of FDI into one industry e.g. the automotive

industry then a country can become too dependent on it and it may turn into a risk

Due to deeper pockets able to influence the government

That is the real danger of the 100 per cent FDI and the selling/takeover of Indian companies

KEY DRIVERS & BARRIERS

Domestic market size, prospects for future market growth, Cheaper operating cost Cheaper input and English-speaking skilled manpower cost Regulatory environment Pricing environment Legal, IPR and financial framework

Poor healthcare coverage Country Attractiveness Index (CAI)

BARRIERS:

DRIVERS:

Measures taken by government:

Government has offered fiscal incentives to R&D units in Pharma sector

Steps have been taken to streamline procedures covering

development of new drug molecules, clinical research etc.

A number of in-house R&D units holding recognition of DSIR have

come up in the Pharma sector. These units are eligible for weighted

tax deduction@200% for the R&D expenditure incurred.

Government has also come up with two new schemes specially

targeted at drugs & pharmaceutical research. These are: 'The New

Millennium Indian Technology Leadership Initiative' (NMITLI) and the

'Drugs and Pharmaceuticals Research Programme' (DPRP).

CONCLUSION The effects of globalization on Indian

industry through FDI has proved to be positive as well as negative

The government of India must try to make economic policies with regard to Indian Industries globalization that are beneficial and not harmful

To attract more FDI in the pharmaceutical sector and effectively compete with other developing countries like China, India should primarily focus in creating a vibrant and large domestic pharmaceutical product and services market reflecting

sustainable high inclusive growth.

"If there is one place on the face

of this Earth where all the dreams

of living men have found a home

when man began the dream of

existence, it is India".

Romain Rolland,

French philosopher