With product patents set to kick in by 2005, the few big multinational drug companies that had kept India out of their plans are having a change of heart.

To begin with, Bristol-Myers Squibb, the New York-based $18.1 billion pharmaceutical giant, is planning to set up shop in India.

Government sources said Bristol-Myers had applied to the Foreign Investment Promotion Board, seeking approval to set up a wholly owned subsidiary for manufacturing and marketing pharmaceutical and health care products, nutritional products and medical devices in the domestic market.

Plans also include exports, besides sourcing raw material, intermediaries and final products.

They said the company had said in discussions with the government that it wanted its proposed Indian operations to play a major role in new drug development programmes.

According to the company's website, at least 50 new drugs are in the pipeline.

Bristol-Myers has appointed Ernst & Young as consultant to facilitate its entry in India.

A source familiar with the development said the initial investment might not be big.

"Bristol-Myers will first seed the Indian market. But, of course, it has major investment plans. The company sees immense opportunities in the Indian market after January 2005, when India reverts to the products patent regime," he said.

The investments will be brought in through Bristol-Myers' subsidiary companies, including the Singapore-based Bristol-Myers Squibb (Singapore) Pvt Ltd.

Bristol-Myers is among a few drug multinationals that do not have a presence in India. Most others, including Pfizer, Novartis, GlaxoSmithkline, Aventis and Eli Lily, have operations in the country.

Industry sources said several drug multinationals were reluctant to enter India because of its patent, which recognises only process patents and not product patents.

This gave Indian companies the scope to copy any drug, as long as they did not infringe a process patent.