Fosun Pharmaceutical to buy controlling 96% in Gland Pharma for $1.4 bn

27 Jul 2016

Shanghai Fosun Pharmaceutical (Group) Co. Ltd, today struck a deal to buy a controlling 96 per cent stake in Hyderabad-based injectable drugmaker Gland Pharma Ltd. for $1.4 billion (Rs9.42 crore), the Economic Times today reported, citing a source, with direct knowledge of the matter.

Fosun, listed on Hong Kong-Stock Exchange and controlled by billionaire Guo Guangchang, is buying a 96 per cent stake, which includes shares held by founders of Gland Pharma Ravi Penmetsa and family and US private equity firm, KKR & Co

However another source told the ET that Gland will initially buy 86 per cent of the company while Penmetsa may retain a 10 per cent stake.

KKR invested about $200 million in Gland Pharma in 2013 for a near 30 per cent stake, valuing the company then at about $600 million. (See: US buyout firm KKR to invest $200 mn in Gland Pharma) The KKR transaction saw Gland Pharma's Ravi Penmetsa and other shareholders reducing their stake to a little over 60 per cent in the company.

Founded in 1978 as an exclusive facility for Small Volume Parenterals (SVPs), Gland Pharma is India's leading manufacturer of low molecular weight heparin and other niche products in the cardiovascular and orthopaedic segment.

The unlisted company set up an injectables facility in 1996 in collaboration with Vetter Group of Germany, Europe's leading contract manufacturing company for injectables in pre-filled syringes.

The collaboration provided Gland Pharma a technological edge in injectables and pre filled syringes.

The unlisted company has pioneered Heparin technology in India and is a leader in the GlycosAminoGlycans range of molecules.

The company manufactures active pharmaceutical ingredients and injectable formulations for niche segments such as osteoarthritis, anti-coagulants, gynecology, and ophthalmology.

The company became the first in India in 2003 to get US Food and Drug Administration (FDA) approval for pharmaceutical liquid injectable products. The company also pioneered pre-filled syringe technology in India and exports products in the format to the US market.

Indian drugmakers are among the biggest producers of cheap generics. With developed nations battling rising healthcare costs and several blockbuster drugs going off-patent, Indian manufacturers are increasingly eyeing the lucrative US market.

Since 2010, Fosun has spent billions buying foreign firms in the healthcare, tourism, fashion firms and banking industry in the US and Europe.

It owns US clothing label St John, Greek jeweller Folli Follie, US insurer Meadowbrook, a 5-per cent stake in the world's oldest travel company Thomas Cook, a controlling stake in French leisure company Club Méditerranée, and wholly owns US insurer Ironshore and Portuguese insurer Caixa Seguros.

It also holds a majority 95.6-per cent stake in Alma Lasers, an Israel-based manufacturer of lasers used in cosmetic surgery.

Fosun Pharmaceutical generates annual revenue of $1.9 billion and has a market cap of $7.1 billion.