Shanghai Fosun Pharmaceuticals (Group) Co. Ltd has received approval from Foreign Investment Promotion Board (FIPB) to pick up a majority stake in Hyderabad-based Gland Pharma Ltd.
The China-based pharmaceuticals company had agreed to acquire an 86% stake in Gland Pharma last year for $1.27 billion (Rs 8,440 crore). Based on this, the Indian firm will be valued at $1.46 billion.
The founders of Gland Pharma, Ravi Penmetsa and his family members, will retain their stake in the entity and run the operations.
The transaction will, however, have to wait till the company receives approval from the cabinet committee on economic affairs, Penmetsa, the managing director and CEO of Gland Pharma, told VCCircle.
This transaction will also allow private equity firm KKR & Co LP and the promoters of German-based Vetter Pharmaceuticals Ltd to exit their investments in the Indian firm.
When contacted, KKR declined to comment on the transaction.
This is the first major investment by a Chinese company in the pharmaceuticals space, after the Indian government allowed foreign direct investments in the sector. Other Chinese firms that have invested in local companies include Didi Kuaidi (now Didi Chuxing), Alibaba and its payments firm Ant Financial. However, these investments have largely been in the technology and payments space.
During the past decade, the pharmaceuticals sector has witnessed a few billion-dollar inbound deals. These include Mylan Inc’s acquisition of Agila Specialties Pvt Ltd from Strides Acrolab Ltd (now Strides Shasun); US-based Abbott Laboratories Ltd taking over the domestic formulations business of Piramal Healthcare Ltd; and Daiichi Sankyo Co Ltd purchasing a majority stake in Ranbaxy Laboratories Ltd. Daiichi had subsequently exited India in 2014 after Sun Pharmaceutical Industries Ltd acquired Ranbaxy.