Govt stops $1.3bn Chinese bid for Gland Pharma

NEW DELHI: The Centre has stalled a $1.3-billion bid by

Shanghai Fosun Pharmaceutical Group

(SFP) to acquire an 86% stake> in Hyderabad-based Gland Pharma, citing "genuine concerns" over proprietary technology developed by the Indian company going over to a Chinese pharma major.

Top government officials on Monday dismissed media reports that the decision was linked to the current border stand-off between the two countries> .

Sources say Gland Pharma has a lead in injectibles, 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% foreign investment in pharma manufacturing through the automatic route.

After clearing FIPB, the proposed acquisition needed the nod of the

Cabinet Committee on Economic Affairs

.

Besides being the largest Chinese acquisition in India, the deal would have also seen one of that country's wealthiest persons investing in the Indian manufacturing story, giving heft to Prime Minister Narendra Modi's `Make in India' initiative.

Promoter Ravi Penmetsa's family and KKR, an American private equity firm, own over 95% 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."We have not heard anything about it (rejection).The FIPB gave its clearance in March. Thereafter we have been following up, but we do not know anything further than that. We did not expect any hurdles," a senior Gland Pharma executive told TOI.