Concerned that many of its drugmakers may be taken over in a wave of mergers and acquisitions, the Indian government is being urged to consider compulsory licensing to assure that prices - particularly for cancer and AIDS meds - remain affordable for its own citizens and as a way to support its economy.

The idea is being floated by the Indian Department of Industrial Policy and Promotion, which notes there were six large takeovers in the past four years, including Ranbaxy Laboratories, Shanta Biotech, Orchid Chemicals and Piramal Healthcare. “Most of these companies are export oriented,” DIPP writes. “There is a concern that their takeover by multinationals will further orient them away from the Indian market, thus reducing domestic availability of the drugs being produced by them. This may weaken competition leading to headroom for increase in domestic drug prices.

“There are increasing concerns that if such a takeover trend continues, an oligopolistic market may develop which may result in a few companies dictating prices of drugs critical for addressing public health concerns including fighting front line diseases like HIV/AIDS, Hepatitis C,” the DIPP continues.

And so the DIPP described compulsory licensing as “a focused and sharp response which can be invoked when a single critical drug is either unavailable per se or unavailable at reasonably affordable prices.” The agency is seeking comment on several issues raised, including the use of compulsory licenses beyond emergencies; the extent to which, if any, these should be issued based an anti-competition law; and the basis for compensatory royalty payments.

The implications are, of course, significant. The concerns expressed in the DIPP document suggest a growing objection to takeovers in response to the ‘emerging markets’ trend espoused by global drugmakers desperately seeking to bolster their thinning pipelines. And the threat of compulsory licenses from a country as large as India is likely to worry pharma execs who have scars from battling Brazil and Thailand in recent years (You can read the entire paper here).