Indian government on the verge of blocking Shanghai Fosun’s 1.3 billion-dollar bid to takeover Gland Pharma

The Indian Cabinet Committee on Economic Affairs has decided to block the bid offered by Chinese conglomerate Fosun to acquire the Hyderabad-based Indian drug maker Gland Pharma Ltd., as cited by reliable reports. Fosun International Limited had offered an amount of USD 1.3 billion to Gland Pharma, however, the deal has been facing strong objection, while government officials have been citing reasons of the current cross-border stand-off between the two countries. Gland Pharma, as reported, has categorically stated that the organization does not have any inkling of the government’s decision, since the deal has received approval from the Foreign Investment Promotion Board (FIPB) and the Competition Commission of India (CCI) few months before.

This agreement is likely to be Fosun’s largest acquisition in India pharmaceutical market, as the Chinese conglomerate will acquire an 86% stake in Gland Pharma, post the deal. As per statistics, the pharmaceutical market in India is the third largest sector in terms of volume and is expanding enormously subjected to the deployment of favorable Foreign Direct Investment (FDI) policies by the Indian government, in a bid to attract foreign investors. For the record, Gland Pharma is one of the dominant players of injectables market and has made it to the headlines for the development of various advanced technologies. The organization is also reputed to have established the Heparin technology in India and is a global leader in the Glycosaminoglycans range of molecules. On these grounds, experts vouch for the fact that Fosun stands to gain heavily from Gland Pharma Ltd.

Fosun has been waiting for the deal approval from the Cabinet Committee on Economic Affairs of India, however, on the basis of the political tensions between both the nations, it is likely that the deal may be blocked by the Committee. The company has stated that the Chinese authorities have sanctioned the takeover of the Indian injectable drugmaker. The latest news bulletin states that the approval date for this deal has been extended to September 26. Losing the nation’s mammoth pharma company to the traditional rival in the pharmaceutical sector has been posing controversial questions to the Indian regulators. Also, there are chances that this deal may reduce the importance of India’s contribution to the pharma industry over the years ahead.

Gland Pharma has been contributing majorly to the Indian drug making sector, which mainly encompasses the development of syringes, pumps, bags, and vials. These injectables are very difficult to produce as compared to regular drugs. This deal will handover all four factories of Gland Pharma, based in Hyderabad, to Fosun. The senior executive of Gland Pharma is surprisingly not expecting any hurdles blocking the success of this deal. Since no official confirmation has been received regarding the deal opposition any way, it is likely that the agreement may bear fruit sooner or later.