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The Narendra Modi government has come in for sharp criticism from some in the Indian pharmaceuticals industry over its policy on the production of generic drugs in India that has been perceived as favouring U.S. drugmakers over Indian ones, and as being directly contradictory to the prime minister's Make in India campaign.

Lee Pharma, a Hyderabad-based mid-sized drug company, said Thursday that the Drug Controller General of India (DCGI) did not allow it to sell cheaper and generic versions of a diabetic drug possibly due to the Modi government's assurance to U.S. pharma companies over the issue of protecting intellectual property rights (IPRs). The company had applied for a compulsory licence from the DCGI last year to produce a cheaper, generic version of the diabetes medicine saxagliptin, made by global pharma firm AstraZeneca.

"The DCGI rejected our application for the second time this year although we covered all the necessary grounds made mandatory by the drug regulator," Lee Pharma's Patent Attorney Afzal Hassan told International Business Times, India on Thursday. "The DCGI last year in one of the hearings said it would go back to seek the views of the commerce ministry .The application, however, was rejected this year," he said.

According to Hassan, the company had fulfilled the legal criteria to obtain the licence under the Bombay High Court's 2014 ruling in favour of NATCO Pharma, which was the first Indian company to apply for such a permit. Hassan also said that the rejection of Lee Pharma's application could be a fallout of Modi's commitment to U.S.-based pharma companies over the issue of protecting their IPR.

During Modi's visit to the U.S. in September, the prime minister reportedly told a gathering of companies in New York that India is "committed to protecting IPR which is essential to fostering creativity." Earlier, in May, the U.S. placed India, along with China, on a list of countries that fail to protect IPR, NDTV reported.

Another Indian pharma company, which sought compulsory licence to sell the generic version of the cancer drug dasatinib, originally manufactured by Bristol-Myers Squibb, said it would no longer pursue the case. BD Pharma had proposed to sell the cancer drug at $122 for a month's course compared to the original price of about $2,491 -- a bid rejected by the Indian government three years ago.

"There is no point in pursuing it anymore," Dharmesh Shah, BDR's managing director, was quoted as saying by Reuters.

The two mid-sized drug companies told Reuters that the Modi government's drive to boost foreign direct investment in India by protecting IPRs may have come in the way of procuring the mandatory licences.

Meanwhile, Medecins Sans Frontieres (MSF) or Doctors without Borders was quoted by STAT News as saying that any effort by the Indian government to curtail the production of cheaper versions of drugs is bound to affect patients not only in India but elsewhere in the world as well.

"We don't have full details from the companies, but we think this may be a case of external pressure placed on India through bilateral discussions with the United States," Yuan Qiong Hu, a legal and policy advisor with the Access to Medicines campaign at MSF, was quoted as saying by STAT News.

MSF had said in March, ahead of the EU-India summit, that Modi should not succumb to pressure from the EU over IPR issues, which could potentially block the access of millions of people globally to cheap medicines.

While the union commerce ministry told Reuters there was no change in its policy to promote manufacturing in the country, the Modi government's move to deny licences to these pharmaceutical companies for the production of generic drugs is being seen to be in direct contrast to his "Make in India" campaign, which aims to create jobs and boost the Indian economy by creating a good environment for manufacturing practices in India.