Govt to block $1.3bn sale of Gland Pharma to China's Fosun

The government has decided to block a $1.3-billion bid by Shanghai Fosun Pharmaceutical Group (SFP) to acquire an 86 per cent stake in Hyderabad-based Gland Pharma, to avert proprietary technology falling into Chinese hands.

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi cited "genuine concerns" over proprietary technology developed by the Indian company going over to a Chinese pharma major.

Reports citing the Chinese firm said the deal has already been cleared by the Competition Commission of India (CCI) and the now-defunct Foreign Investment Promotion Board (FIPB), but it needed to be approved by the Cabinet Committee on Economic Affairs.

Chinese authorities have approved the takeover of the injectable drugmaker, but the Indian government is not ready to part with indigenously-developed medical technology.

The companies have not been formally notified of the government move yet, according to officials who refused to be identified. They also denied the decision having any links with the current border stand-off between the two countries.

Gland Pharma has a lead in injectables, an area where Chinese firms lag Indian pharma companies. Gland Pharma says it has pioneered Heparin technology in India, and is a world leader in the Glycosaminoglycans range of molecules.

Last year, Chinese billionaire Guo Guangchang, who runs a diversified conglomerate under the banner of Fosun International, struck the billion-plus-dollar deal to buy Gland Pharma following the government's decision to allow 74 per cent foreign investment in pharma manufacturing through the automatic route.

Promoter Ravi Penmetsa's family and US private equity firm KKR together own over 95 per cent stake in the company. They had appointed Jefferies & Co to find a buyer. The bidding process had attracted interest from US-based Baxter and buyout investor Advent International, among others.

Gland Pharma said it had no information about the government's decision.

A small volume parenterals (SVPs), founded in 1978 by Hyderabad-based visionary PVN Raju, Gland Pharma has emerged a global player with presence in about 90 countries in five continents.

The company has a wide range of injectables, including vials, ampoules, pre-filled syringes, lyophilized vials, dry powders, infusions and ophthalmic solutions. It is credited with pioneering Heparin technology in India, and is a world leader in the Glycosaminoglycans (GAGs) range of molecules.

Its manufacturing facilities are accepted by global regulatory agencies, including USFDA (USA), MHRA (UK), TGA (Australia), BGV (Germany), WHO (Geneva), ANVISA (Brazil), etc.

Gland Pharma was the first in India to set up a state-of-the-art pre-filled syringes (PFS) facility at Hyderabad in 1998, as well as the first liquid injectable facility in India to be accepted by USFDA. In addition, it has a USFDA-accepted oncology facility at Visakhapatnam.