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China's Fosun to buy 74% stake in Gland Pharma for $1.1 bn in revised deal

India allows foreign investment of up to 100% in pharmaceutical sector but above 74% requires govt approval

Reuters  |  Beijing/Mumbai 

Fosun Pharma, Chinese drug firm, Fosun
A company logo is pictured at the headquarters of Shanghai Fosun Pharma Group in Shanghai

Pharmaceutical Group is trimming the size of the stake it will buy in India's to 74 per cent for $1.1 billion, in bid to salvage the stalled deal that would be the biggest takeover by Chinese firm in

had struck deal in July last year to buy an 86 per cent stake valued at about $1.26 billion in the Indian generic injectable drugmaker, but the deal had raised concerns among some in the Indian government, source had told Reuters previously.

allows foreign investment of up to 100 per cent in its pharmaceutical sector but above 74 per cent requires government approval.

Two sources with knowledge of the matter told Reuters that the Chinese drugmaker had agreed to lower the stake it planned to acquire in to 74 per cent, mainly because it sought to get the deal completed more smoothly and faster. is backed by private equity firm KKR & Co LP.

said in statement on Sunday the deal no longer required nod from the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi. It said it had already received approval from Chinese regulators and applied for antitrust approval in the United States and

The Chinese drugmaker added that Pharma's founding family wanted to retain bigger holding in the Indian company because of its good performance.

managing director Ravi Penmetsa told Reuters some approvals the original deal had received were at risk of expiring.

"Now with this new agreement, we won't have to reapply for those," he said, adding that he expects the deal to be completed in two weeks.

Pharma's parent, International, has been the poster child for China's decade-long overseas push that saw Chinese bidders spend record $105 billion on assets ranging from film studios to football clubs in 2016.

Best known outside for its acquisition of French resort chain Club Med, International was among acquisitive firms that found itself in the cross-hairs of Chinese authorities, sources have said.

But its executives said in late August that would continue to conduct overseas deals and scout for targets in areas including drug manufacturing.

said in mid-August it was bidding for stake in US specialty drugmaker Arbor Pharmaceuticals LLC.

On Sunday said it would spend no more than $25 million to market the Indian company's enoxaparin blood-thinning drug in the United States, when it obtains approval there, cutting the previously proposed marketing spend by half.

In statement on Sunday, said the deal would allow it to make biosimilars - lucrative copies of biotech drugs - at Fosun's site and sell them in

"It won't happen overnight, but we have started working on it," Penmetsa said.

Penmetsa and his father, P V N Raju, will remain on the board and the current management team will continue to run the company.

First Published: Mon, September 18 2017. 12:26 IST