FIPB green lights Gland Pharma’s acquisition by Shanghai Fosun
Shanghai Fosun has agreed to buy about 86% in Gland Pharma, including the 36% stake held by private equity firm KKR, in a $1.3 billion deal
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New Delhi: The Foreign Investment and Promotion Board (FIPB) on Wednesday cleared Shanghai Fosun Pharmaceutical (Group) Co. Ltd’s $1.3 billion acquisition of Hyderabad-based Gland Pharma Ltd.
In July, the Hong Kong-listed Chinese company controlled by billionaire Guo Guangchang had agreed to acquire approximately 86% in the injectable drugmaker, including 36% held by KKR & Co. The Vetter family, which controls Germany-based Vetter Pharma, is also an investor in privately held Gland Pharma and will sell its stake in this deal. When contacted, Sanjay Nayar, chief executive officer of KKR India, confirmed the development.
KKR had acquired the Gland Pharma stake in 2013 for $200 million from Evolvence India Life Sciences Fund. At a deal size of $1.3 billion for 86%, KKR’s 36% stake is valued at $540 million.
The deal will boost Gland Pharma’s presence in Africa, Europe and Japan.
Gland Pharma develops and manufactures generic injectables, primarily for the US market. Established in 1978, the company sells its products in India and other semi-regulated markets. Gland’s manufacturing facilities have approvals from regulatory agencies from Australia, Germany and the UK, in addition to the World Health Organization (WHO).
Fosun, which has interests in wealth management, pharmaceuticals, mining, steel and realty, was vying with US drug maker Baxter International Inc. to buy Gland Pharma.
This was the first deal in the pharmaceutical sector after the central government relaxed foreign direct investment norms in May, allowing FDI of up to 74% in pharmaceutical companies through the automatic route.
Later, Ahmedabad-based Claris Lifesciences Ltd agreed to sell its global generic injectables business to US-based Baxter International Inc. for $625 million (Rs4,238 crore) in December. Several Indian injectable makers have attracted interest from foreign buyers. In 2013, Bengaluru-based Strides Arcolab Ltd sold Agila Specialties, its injectable drugs unit, to US-based Mylan Inc. for $1.75 billion.
The global market for injectables was estimated at around $300 billion in 2014. The US accounts for around 35% of the market. The Indian market is estimated to be around $2 billion.
According to data from Grant Thornton Advisory Pvt. Ltd, there were 54 pharma M&As in 2016 in India with total value of $4.87 billion, while private equity or venture capital investments in the sector totalled $653 million.