Government policy and regulatory changes were the focus point for the pharmaceutical industry in India in the year 2011.

The government actively intervened in business and sought more control in various activities from acquisition to pricing controls. While some changes were opposed others were implemented as the companies in the sector continued their business.

Ranbaxy Laboratories was able to reach an agreement with the US FDA to revoke a ban on sale of drugs produced at some of its plants, in the US market. Lupin acquired I'rom Pharmaceutical Company in Japan and Sun Pharma proposed a complete takeover of the Israeli firm Taro.

The government appeared concerned over the pace at which MNCs were acquiring Indian pharmaceutical firms and was concerned over the priced of drugs in the country. The government decided to have a mechanism in place and introduced checks by removing automatic approval of foreign direct investment (FDI) in existing domestic pharmaceutical companies.

Under the new rules, any foreign investor will now have to get an approval from the Foreign Investment Promotion Board (FIPB) for all mergers or acquisitions. The decision to introduce such mechanism was taken after a directive from Prime Minister Manmohan Singh. The PM had held discussions with several of his cabinet ministers on the issue of acquisitions of domestic pharmaceutical firms by overseas firms.