China's Fosun to buy Gland Pharma for $1.26 billion

Will acquire 86% stake in KKR-backed Indian firm, signs definitive agreement for the largest acquisition of an Indian company by a Chinese firm

In the largest acquisition of an Indian company by a Chinese firm, Shanghai Fosun Pharmaceutical Group Co today agreed to buy Hyderabad-based drugmaker Gland Pharma Ltd for about $1.26 billion (nearly Rs 8,500 crore).

Fosun Pharma will acquire 86 per cent of Gland Pharma for $1.26 billion, the KKR-backed Indian firm said in a statement adding that a definitive agreement has been signed for the deal.

Gland Pharma's founders and US private equity firm KKR, who jointly hold around 96 per cent of the drugmaker, will sell most of their stake to Fosun.

"Based on the agreement, Fosun Pharma will purchase all shares of Gland owned by KKR Floorline Investments Pte Ltd in addition to shares purchased from other shareholders of the company," it said.

Gland founder P V N Raju and his son Dr Ravi Penmetsa will continue to be on the Board, and Dr Penmetsa will continue as the Managing Director and CEO.

The family will retain a stake in Gland.

Established in 1978, Gland develops and manufactures generic injectables for use in nearly 90 countries on five continents, with a focus on the Indian and US markets. It owns four factories.

Injectables are widely used medicines administered through vials, syringes, bags and pumps and are harder to make than regular medicines.

KKR, which invested in Gland in 2014, is exiting the firm completely.

While privately held Gland Pharma's line up of therapies includes antibiotics, oncology and cardiology treatments; Shanghai-based Fosun Pharma's product lines range widely from cardiovascular drugs and cancer treatments to diagnosis equipment and scalpels.

"We looked at many partners with the help of KKR and as we went through this process we felt Fosun suits us the best because they are a conglomerate, they have a lot of resources, they are worldwide and they also have Fosun Pharmaceutical which is a multinational. They have a presence in Israel, they have R&D in the US," Penmetsa said.

The Chinese firm has several R&D centres and manufacturing in China and they are also strong in active pharmaceutical ingredient (API), he added. "So, we felt that this will really compliment what we already created.

Simpson Thacher & Bartlett and Cyril Amarchand Mangaldas provided legal advice to KKR and Gland. Jefferies acted as exclusive financial advisor to Gland and KKR.

The transaction is subject to customary regulatory approvals, the statement said.

Chen Qiyu, Chairman of Fosun Pharma, said, "We are pleased to incorporate Gland into the Fosun Pharma family. Gland's management team, along with support from KKR, has done a tremendous job in growing its business to become the global leader in the generics injectables industry."

The deal, he said, will greatly strengthen Fosun Pharma's global presence and accelerate our speed of internationalisation. It will enable us to provide more high- quality products and services to our patients worldwide.

"Fosun Pharma is dedicated to implementing our investment model of 'Combining China's Growth Momentum with Global Resources' with the win-win cooperation with Gland," he added.

Penmetsa said, "This transaction truly demonstrates the strong expertise of our people and the potential for Indian companies to improve healthcare in markets worldwide. We look forward to continuing our work to research, develop and provide medical products from India and continue to add capacity at our facilities.