The cabinet committee on economic affairs (CCEA) is yet to take a call on the Gland Pharma-Fosun deal, a government official told ET. The proposal was listed for CCEA’s consideration two weeks back but could not be taken up.
“It is wrong to say that the deal has been rejected,” the official said. There have been reports that the CCEA has rejected Chinese firm Shanghai Fosun Pharmaceutical’s proposed $1.3 billion takeover of Indian company Gland Pharma. There is speculation that the deal has got stalled because of the heightened India-China border tensions. The now abolished Foreign Investment Promotion Board (FIPB) had in March this year approved Fosun’s proposal to acquire 86 per cent stake in the injectable drugmaker.
This included 36 per cent stake held by KKR. The deal was announced in July 2016. The current FDI policy allows 100 per cent FDI in brownfield pharma (acquisition of stakes in existing pharma companies) but this is subject to government approval. This condition was imposed following concerns that large-scale buyout of Indian pharma companies by MNCs will reduce supply of cheap medicines. Such acquisitions are finally cleared by the CCEA.
In a Hong Kong stock exchange filing on July 27, Fosun had said “…the approvals of the relevant PRC authorities in respect of the acquisition have been obtained and the US antitrust filings and the Indian antitrust filings have been completed.”
