India is poised to reject Shanghai Fosun Pharmaceutical Group Co.’s proposed $1.3 billion takeover of an Indian drugmaker, according to people familiar with the matter, scuppering the biggest-ever Chinese acquisition in the country. The Cabinet Committee on Economic Affairs, which is chaired by Prime Minister Narendra Modi, has decided to block the Chinese firm’s purchase of an 86 percent stake in Gland Pharma Ltd., according to the people. The companies haven’t been formally notified yet of the move, the people said, asking not to be identified because the information is private.
Tensions between China and India have escalated amid a renewed spat over territory in a remote area of the Himalayas, one of the most serious flareups between the two Asian giants since a border war in 1962. A collapse of the acquisition would be a setback for Fosun Pharma, which had sought Gland Pharma’s stable of generic injectable medicines and facilities approved to manufacture products for sale in the U.S.
Fosun Pharma, backed by Chinese billionaire Guo Guangchang, agreed in July last year to acquire control of Gland Pharma from an investor group including KKR & Co. The setback highlights the difficulties faced by China’s once-prolific acquirers, who are facing mounting pressure at home and abroad. HNA Group Co. recently scrapped the purchase of an in-flight entertainment provider, while Dalian Wanda Group Co. agreed to sell most of its theme-park assets amid scrutiny from regulators.
The Gland Pharma purchase had already completed Indian antitrust filings and been reviewed by country’s Foreign Investment Promotion Board. Jagdish Thakkar, a spokesman in the Indian Prime Minister’s Office, didn’t return phone calls, while an email sent to Cabinet Secretary Pradeep Kumar Sinha wasn’t answered. Representatives for Gland Pharma and KKR didn’t immediately respond to requests for comment.
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A representative for Fosun Pharma declined to comment beyond an exchange statement last week. Fosun Pharma said in a July 27 filing to the Hong Kong bourse that it had obtained relevant approvals from Chinese authorities. The acquisition is still subject to the review and approval of India’s Cabinet Committee on Economic Affairs, so the termination date has been further extended to Sept. 26, the filing shows.
Chinese drugmakers have grown more ambitious in seeking deals that will give them access to the U.S., the world’s biggest pharmaceutical market. Valeant Pharmaceuticals International Inc. this year sold its Dendreon Pharmaceuticals unit to Chinese conglomerate Sanpower Group Co. for $820 million. Humanwell Healthcare Group Co., a Chinese maker of anesthetics and contraceptives, is part of a consortium that agreed in June to buy U.S.-based RiteDose for about $605 million.