Role of Foreign Direct Investment in Research and Development of Pharmaceutical Industries in India

Multinational companies (MNCs) have responded to India's movement towards compliance with the WTO intellectual property agreement, TRIPS, by increasing the quantity and quality of foreign direct investment (FDI) in the areas of pharmaceutical research and development (R&D) and manufacturing. Drug prices do not necessarily provide an accurate signal of consumer's preferences in all cases. However, it is not always clear why the market sustains high prices for some new drugs when cheaper alternatives of seemingly comparable quality are available. By contrast, MNCs have adopted a more cautious attitude toward patenting and commercialization of pharmaceutical products in India, waiting to see how Indian courts and patent office's interpret the new laws, and awaiting the enactment of data exclusivity legislation.