India is Rejecting 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, Which is considered by many economic Experts as a Whole new Level of Smart Financial Diplomatic Attack on Chinese Business Interests, By any Indian Govt so far in History.
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 of Dokalam Tri Junction, 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.
Besides being the largest Chinese acquisition in India, the deal would have also seen one of that country’s wealthiest persons investing in the Indian manufacturing story, giving heft to Prime Minister Narendra Modi’s `Make in India’ initiative.Sources say Gland Pharma has a lead in injectibles, an area where Chinese firms lag Indian pharma companies. Gland Pharma says it has pioneered Heparin technology in India, and is a world leader in the Glycosaminoglycans range of molecules.
Last year, Chinese billionaire Guo Guangchang, who runs a diversified conglomerate under the banner of Fosun International, struck the billion-plus-dollar deal to buy Gland Pharma following the government’s decision to allow 74% foreign investment in pharma manufacturing through the automatic route.
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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