Pharma Firms Bought Electoral Bonds Amid Quality Failures, IT Raids

Pharmaceutical Sector’s Strategic Political Financing

Newsreel Asia Insight #165
March 19, 2024

Thirty-five pharmaceutical companies in India have channelled nearly 10 billion rupees into political parties through electoral bonds, with at least seven under investigation for substandard drugs during their purchase, according to a media report, which raises concerns about the influence of the pharmaceutical sector on political and regulatory environments.

The Election Commission of India’s data from March 14 highlighted these transactions, revealing a significant political investment by the industry. The seven companies that were under investigation and bought electoral bonds are Hetero Labs, Torrent Pharma, Zydus Healthcare, Glenmark, Cipla, IPCA Laboratories and Intas Pharmaceutical, according to the report, published by Newslaundry and part of a collaborative project involving two other news organisations, The News Minute and Scroll, and independent journalists.

Amar Jesani, editor of the Indian Journal of Medical Ethics, is quoted as suggesting that pharmaceutical companies might finance political parties to negotiate regulatory compromises.

The detailed financial contributions and regulatory challenges of the companies reflect the sector’s strategic political financing. For instance, Hetero Labs, facing quality issues with drugs like remdesivir, bought electoral bonds worth 600 million rupees despite regulatory scrutiny. Torrent Pharma, with a history of quality failures, invested 775 million rupees in bonds, while Zydus Healthcare, Glenmark, Cipla, IPCA and Intas also made significant purchases amidst quality control controversies.

These investments coincide with increased international scrutiny over Indian pharmaceuticals, linked to global health incidents. “In recent years, the country’s pharmaceutical sector has been in the global spotlight for deaths and infections linked to Indian-made cough syrups and eye ointments in several countries,” the report notes. “The governments of these countries have suspended purchases, and international bodies organisations like the World Health Organization have issued alerts but the response of Indian authorities has been lax.”

According to The New Indian Express, entities such as Yashoda Super Speciality Hospital and Dr. Reddy’s Laboratories were also subject to IT and ED raids and who purchased electoral bonds.

Yashoda Super Speciality Hospital led the healthcare and pharma bond market, securing 162 bonds, each priced at 10 million rupees, amounting to a total of 1.62 billion rupees. Dr. Reddy’s Laboratories was a close second, with 80 bonds at the same price per bond, reaching a total of 800 million rupees, according to CNBC TV18.

Companies often make substantial donations to political parties as a strategic investment rather than out of a commitment to societal welfare or democratic values. This investment is primarily aimed at gaining access to and influence over policy-making processes that could benefit their business operations. For instance, by contributing large sums to political parties, companies can secure a seat at the table where decisions affecting their industry are made. This access can lead to favourable legislation, relaxed regulatory enforcement or expedited approvals for their products and services. The expectation is that these political contributions will yield a return on investment in the form of business-friendly policies, tax breaks or government contracts.

While corporate social responsibility (CSR) initiatives are often publicised as efforts to give back to society, they are separate from political donations and serve different purposes. CSR is often about building a positive public image and engaging in community development, whereas political donations are more about directly influencing the corridors of power to secure economic or regulatory advantages.

In the case of pharmaceutical companies, the scepticism regarding their donations to political parties stems from the apparent conflict between their profit-driven motives and the altruistic ideals of democracy and civil rights. The critical view is that these companies are more interested in shaping policies that protect their market interests rather than genuinely supporting the democratic process or advancing civil liberties.

The State Bank of India (SBI) has reported that 22,217 electoral bonds were bought between April 2019 and February 2024, with the ruling Bharatiya Janata Party (BJP) receiving nearly 48% of the total redeemed bonds, amounting to 60.6 billion rupees. The Supreme Court’s directive for the SBI to disclose bond details aims to enhance transparency, yet the full mapping of donors to recipients remains undisclosed.