China’s maiden billion-dollar Fosun Pharma has acquired a share equivalent to 74 per cent in India’s Gland Pharma for $1.09 billion, opening a new chapter in the history of China and Indian pharmaceutical industry. In the regulatory filing, the pharmaceutical giant in China said that with the finishing of the acquisition, Gland Pharma has indirectly become a non-wholly owned subsidiary of Fosun Pharma and Fosun International.
The takeover opening a new chapter in the history of China and Indian pharmaceutical industry.
The Indian company’s promoters Ravi Penmetsa and his father P V N Raju will continue on the board of the company, Gland Pharma said in a statement. Besides, the present management team will be in-charge of the day to day running of the company, it added.
It all began in July 2016, when China’s Fosun pharmaceuticals agreed to acquire approximately 86% stake in Gland Pharma for $1.4 billion. The news of the takeover immediately grabbed eyeballs, making headlines. It was the largest takeover of an Indian pharma giant by a Chinese company.
As per the terms of the original transaction, Fosun had said that it will acquire the shares held by Gland Pharma founders Ravi Penmetsa and his family and PE giant KKR. KKR had acquired nearly 36% in the company in 2013 for $200 million, which is now valued at $540 million. Under the terms of the original transaction, KKR will sell its entire stake, while Gland Pharma’s other investors, including founder P.V.N. Raju, his son Ravi Penmetsa and the Vetter family, which controls Germany-based Vetter Pharma, would also sell a part of their stakes. Mr Penmetsa would remain managing director. The residual stake will remain with the founder family.
Commenting on the acquisition, Gland Pharma said in a statement, "The partnership will leverage synergies as foreseen by the management teams of both Gland Pharma and Fosun Pharma. Some of these synergies include the bio-similar program developed at Fosun being made available for manufacturing by Gland Pharma and introducing them to the Indian market. Furthermore, the partnership will create new channels to sell the products of Gland Pharma in markets where Fosun has an existing presence,"
The deal, once materialized, will help the Chinese company make inroads into India, gain access to US injectable drug market where Gland has a firm hold and bolster its product portfolio with new oncology drug pipeline. However, this scaling of the great wall by Fosun, wasn’t easy. The deal did not get a nod from Indian CCEA authorities and Fosun had to settle with a smaller stake of 74 percent. But wait, did Fosun actually lose much? Except for a small stake?
The original deal was approved by the Foreign Investment Promotion Board (FIPB) earlier this year, while the Competition Commission of India approved it earlier in December 2016. FIPB referred the deal to CCEA in April. India allows foreign investment of up to 100 per cent in its pharmaceutical sector but above 74 per cent requires government approval.
Following these approvals, the deal, however gathered dust at the CCEA, and the Indian authorities sat on it, giving no word to both the companies on the acquisition. There was a wide speculation and media reports that the deal would be ‘blocked’ amid heightened border tensions between the two countries.
Fosun then decided to take the by-pass route and trim its stake to 74 percent. With this, Fosun no longer needed the approval of Indian government as per the revised Indian FDI guidelines. Fosun said in a statement that the reduced stake will avoid a government review and the transaction was completed by October 3rd with all the main conditions being met. "The approvals of the relevant [Chinese] authorities and the United States antitrust filings and Indian antitrust filings in respect of the transactions have been completed," Fosun Pharma said i...
(All Rights Reserved)