Shanghai Fosun Pharmaceutical Group Co Ltd (Fosun Pharma) will acquire an 86% stake in Gland Pharma Ltd for an estimated US$1.2–1.5 billion in China’s largest ever takeover of a company in India.
Fosun Pharma, a China-based healthcare company, operates in pharmaceuticals, healthcare services, diagnostic products and medical devices, in areas including metabolic and gastrointestinal disorders, cancer, immune disorders and cardiovascular disease.
Representing an expansion to their portfolio, Indian company Gland Pharma specializes in injectable generic drugs. It became the first Indian pharmaceutical company to obtain US Food and Drug Administration (FDA) approval for liquid injectables in 2003 and markets its products, which include heparin to prevent blood clots, to majority US customers including Dr Reddy’s and Mylan.
Fosun Pharma announced the acquisition proposal to the stakeholders of Gland Pharma in May 2016, amidst reported competition from American healthcare company Baxter International Inc, private equity firm Advent International and fellow Indian pharmaceutical company Torrent. Fosun Pharma is set to acquire an 86% stake in the firm, including all shares owned by US private equity firm KKR & Co LP.
This is an extraordinary development, as it is fairly rare for Chinese pharmaceutical companies to buy companies in India, and perhaps a sign of the booming injectables industry in the country. Several Indian injectable producers have recently attracted interest from foreign buyers; in 2013 generics giant Mylan bought the injectables unit of Bangalore-based Strides Arcolab Ltd for US$1.6 billion, making Mylan a world leader in injectable generics [1]. More recently, in October 2015, Sweden’s Recipharm AB announced its plans to acquire a majority stake in Indian sterile injectables manufacturer Nitin Lifesciences Ltd.
As well as a growing injectables market, the acquisition – the first ever billion-dollar takeover of an Indian company by a Chinese company – also follows the relaxation of rules on foreign investment in India. The government will now automatically approve foreign investments of up to 74% in pharmaceutical manufacturing in an effort to increase investment in the country. Previously, foreign takeovers of this size required lengthy government approvals.
The deal will improve Fosun Pharma’s capability in injectable drugs and expand its manufacturing network in India (acquiring access to seven manufacturing sites and research units), although it is yet to be cleared by the Foreign Investment Promotion Board and The Competition Commission of India.
Chinese manufacturers already supply the majority of active pharmaceutical ingredients (the part of a pharmaceutical drug that is responsible for its biological effects) to Indian pharma, although regulatory action is not expected as the deal recognizes existing Indian capability and does not conflict with the government’s ‘Make in India’ initiative to encourage companies to manufacture their products in India.
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Reference
1. GaBI Online - Generics and Biosimilars Initiative. Mylan to acquire Strides Arcolab’s injectable generics business [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International [cited 2016 August 19]. Available from: www.gabionline.net/Generics/News/Mylan-to-acquire-Strides-Arcolab-s-injectable-generics-business
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