Rejecting the proposal by Shanghai Fosun Pharmaceutical Group (SFP) to buy an 86 percent stake in Gland Pharma for $1.3 billion, the government has raised "genuine concerns" that the technology developed by an Indian company will be passed over to a Chinese company, said a report in The Times of India.
"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 United States anti-trust filings and the Indian antitrust filings have been completed".
The report cited sources as saying that Gland Pharma is a leader in injectibles, which is a weak area for the Chinese pharma. "The acquisition obtained prior approval from relevant (Chinese) authorities, and is pending review and approval from the Cabinet Committee on Economic Affairs of India", said a Fosun spokeswoman Tuesday. But the cabinet did not agree.More news: Grandmother came into contact with flesh-eating bacteria in Myrtle Beach, family claims
The deal will be called off when tensions between India and China have escalated amid a renewed spat over territory in Sikkim, one of the most serious flare ups since a war in 1962.
"From Chinese investment into India for M&A, yes there's going to be an impact", Veritas' Joshi said. The setback highlights the difficulties faced by China's once-prolific acquirers, which are facing mounting pressure at home and overseas. The acquisition is still subject to the review and approval of India's CCEA, so the termination date has been further extended to September 26, the filing shows. The ostensible reason behind holding back the approval is the modern injectable technology that the Hyderabad-based Gland Pharma has, which the government is wary of falling into foreign hands. India's trade with China was at $72.3 billion previous year, with Chinese exports accounting for 84 percent of the volume.
The $1.26 billion deal would have seen private equity firm KKR as well as founders of Vetter Pharma and Gland Pharma sell stakes in the entity.More news: OH senators hope proposed legislation will curb online sex trafficking
Its manufacturing facilities are accepted by global regulatory agencies, including USFDA (USA), MHRA (UK), TGA (Australia), BGV (Germany), WHO (Geneva), ANVISA (Brazil), etc. It also has oncology facility in Visakhapatnam, which received USFDA approval in 2013.
"We have not had any official communication from any of the governmental departments so far", Gland Pharma Vice Chairman and Managing Director Ravi Penmetsa said.More news: Medical marijuana growing site, dispensing center coming to Schenectady County
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