Foreign Direct Investment (FDI ) in Pharmaceutical Industry

Foreign investment is permitted in the pharmaceutical industry in Nepal in order to create a favorable environment for foreign investors, and investors’ rights are also protected.

Domestic production is expected to cover 45 percent of total demand, with the remaining 45 percent coming from imports, India, and third-world countries. Most prescriptions are widely available, although many life-saving treatments are occasionally in short supply. It is very painful. Nepal’s pharmaceutical business is now open to foreign investment. When it comes to foreign investment, the following steps must be followed:

Department of Drug Authority (DDA)

The Department of Drug Authority (DDA) was established to address the issue of drug usage and misuse in Nepal. Controlling pharmaceutical manufacturing, marketing, distribution, sale, export, import, storage, and use helps to eliminate false and misleading advertising and guarantees that the general public has access to safe, effective, and high-quality drugs.

Foreigners who want to invest in or register in the pharmaceutical industry must first get permission from the DDA (Department of Drug Administration). Prior to the foundation of the drug industry, the Department of Drug Administration (DDA) will have to ensure and provide evidence of the medicine’s safety, quality, and efficacy.

The term “drug” is defined under the Drug Act of 1978 (2035) as “any substance for the diagnosis, cure, mitigation, treatment, or prevention of a disease in a human person, animal, or bird, or for the destruction of vermin or insects that cause diseases in the human being, animal, or bird. “Or any other materials or components that will be used in the manufacture of such a substance.”

1. The Drug Act of 1978 governs drug manufacturing, importation, exportation, storage, supply, sales, and distribution, as well as quality control, regulatory oversight, rational use, and information flow. The main guidelines are as follows:

·         1979 – Regulation on the Establishment of a Drug Consultative Council and a Drug Advisory Committee

·         Drug Registration Regulations,

·         Drug Investigation and Inspection Regulations,

·         Drug Manufacturing Codes, 1984, and

·         Drug Standard Regulations, 1985.

·         The 2015 Code on Drug Sale and Distribution

2. The procedure for establishing the pharmaceutical manufacturing industry is as follows:

A. Department of Drug Administration application (DDA)

Drug Registration Regulation 1981 requires a reference letter from an applicant who want to start a pharmaceutical business.

The document listed below is required. 

The drug name and details of the company, such as Drugs Name:, are required to set up the drug industry. (Include the District and Municipality’s names and ward numbers, as well as the Village Development Committee’s name and ward number.) b) The establishment’s location: (Include the District and Municipality’s names and ward numbers, as well as the Village Development Committee’s name and ward number.) (a) Capital estimates and capital sources: (c) (d). If there is a preliminary study report on the establishment attached.

(e) Whether the plan includes a model and outline of where the proposed industry would be located:

A thorough feasibility study report in the following format:

The applicant(s)’ citizenship/registration certificate (authorized person from among board of directors) 1 Registration fee (as specified)

Pharmaceuticals must meet the following requirements:

An applicant should follow the following guidelines while developing a pharmaceutical business building. (a) A description of the required raw materials and their suppliers for pharmaceutical manufacturing in the proposed industry:

(a) Whether a machine is necessary, and if so, what information is needed:

(c) Of the required structure or residence:

(2) What will it consist of:

(3) Specify if the external environment will be unclean, tidy, and clean, or not:

(4) The air’s ability to move throughout the room: Explain why and how a room must be built in such a way that air can or cannot flow through it:

(5) Whether or not the room can get sunshine or light: Mention why and for what purposes a room like this is being remodeled.

4.         (Planning a manufacturing facility)

The applicant must get Department approval of the proposed manufacturing premises’ layout design before initiating any construction. If you want your layout design to be approved by the department, you must meet the following requirements.

5. Site Planning: Layout of the building

·         The applicant shall examine the nature of the product and the potential risk prior to obtaining permission and carrying out construction activities.

·         A detailed layout design for a pharmaceutical production plant.

·         In the proposal, any applicable standards should be qualified.

5. A manufacturing permit

A manufacturing license is required for every company that wishes to register as a drug manufacturer. Before a generic license may be obtained, the logo of the brand name, as well as the chemical formula, must be trademarked and a certificate secured. A separate application must be completed for each grade, dosages, and pack size of the same active pharmaceutical entity or a combination of active pharmaceutical entities in order to get a Manufacturing license.

The Medication Enforcement Administration (DEA) will have to thoroughly analyze and verify the drug’s brand name and the drug’s brand that will be manufactured to see if they are equivalent to other drug brands. It will be compared to other trademarks that have already been registered by the department.

If the proposed Brand name is determined to be SALA (sound similar and look alike) with another brand that is already registered in the department, the department will write off the latest brand and, if applicable, a new brand name will be provided with the applicant’s approval. Priority will be given to brand names that have been registered under the current Act. For brand naming and other labeling requirements, the applicant should consult the department’s INN guideline and labeling standards.

The applicant shall declare that the proposed name is not in use or registered by other companies both nationally and internationally, to the best of their knowledge and after consulting publicly available international sources.

6. The product’s license

Those looking to invest in the pharmaceutical industry must first obtain a product license for the drug they plan to produce. The industry must be well-established in order to be eligible for a product license. The Drugs Act, 2035(1978), and the Drugs Registration Rules, 2038(1981), both demand the serial number of the drug in order to get a product license.

Drug industry: (a) Name: (b) Place of establishment: (Also mention the name and ward number of the district, Municipality and Village Development Committee). Product license obtainer’s: (a) Name and surname: (b) Address:  (c). Fees received for product license issuance:

Rs. — d.  Validity of the product license: Licensees who have received product licenses include:    

7. Marketing permission:

A Manufacturing license is required before a drug can be sold on the market. Then you’ll need to get a marketing permit. The marketing authorization letter for commercial reasons should be received after indicating the commercial batch.

Commercial batch manufacturing records, comprising excipients, color, and packaging data, as well as test reports, are required to get Marketing permission. It is necessary to collect both the product specification and the whole analytical test result. A copy of a valid pharmaceutical manufacturing license is also necessary. To obtain Marketing approval, commercial batch manufacturing records, including excipients, color, and packaging data, as well as test results, are necessary. Both the product specification and the entire analytical test result must be collected. Also, a copy of a current pharmaceutical manufacturing license is required.

8. GMP certification and a quality standard

GMP refers to a system for guaranteeing that products are consistently manufactured and controlled in accordance with quality standards. This must be obtained through the DDA’s GMP certification. Its purpose is to reduce any risks associated with pharmaceutical manufacture that cannot be eliminated through final product testing. Unexpected product contamination, which can result in health issues or even death; erroneous container labeling, which can result in patients receiving the wrong treatment; and improper container labeling, which can result in patients receiving the wrong medicine. 

9. conclusion,

100% foreign investment in the medicine industry is permitted in Nepal. If you are interested in investing in the pharmaceutical business, please call us at +977-9745374671 or by email : info@corporatelawyernepal.com for legal advice.