Fosun to buy KKR-backed Indian drugmaker for up to $1.3 bn

The largest inbound acquisition of an Indian company from abroad this year

Shanghai Fosun Pharmaceutical Group Co Ltd has agreed to buy an 86 per cent stake in Gland Pharma – backed by KKR & Co LP – for up to $1.3 billion, the largest inbound acquisition for the country this year.

The deal, announced by the Chinese company on Thursday, is the first major move by the Fosun group since Guo Guangchang, founder of flagship holding firm Fosun International Ltd and one of China’s best-known entrepreneurs, went missing briefly late last year.

The acquisition, which is subject to regulatory approvals, would also underscore a positive outlook for drugmakers in India, which is a major global supplier and counts the United States as its largest export market, helped by lower manufacturing and labour costs.

Gland Pharma, based in Hyderabad, owns four factories from where it supplies a variety of injectables — widely used medicines administered through vials, syringes, bags and pumps, which are harder to make than regular medicines.

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Moody’s Indian associate Icra expects patents to expire on about $16 billion worth of injectables in the US over four years through 2019, offering a growth opportunity for Indian suppliers. Icra estimates the US injectables market to grow at about 10 per cent annually over five years.

Gland Pharma’s founders and US private equity firm KKR jointly hold roughly 96 percent of the drugmaker.

Shanghai Fosun, in a statement, said it will buy 86.1 per cent of Gland, and plans to raise up to $800 million in loans from financial institutions to help fund the deal.

The Fosun group is also looking for opportunities in Britain and Europe, in markets rendered increasingly volatile by Britons' vote to leave the European Union, billionaire Guo said at a Reuters Newsmaker event last month. 

Besides Fosun, the Gland Pharma sale attracted interest from private equity firm Advent, medical company Baxter International Inc and drugmaker Torrent Pharmaceuticals Ltd, people close to the matter told Reuters in April. 

Opportunities for injectables in the US has attracted large pharmaceutical firms such as Mylan NV, which bought the injectables business of Strides Shasun Ltd in 2013. 

Hospira, a large US-based injectables firm, was bought by Pfizer Inc last year.