Mitsui’s stake buy in Arch Pharma gets CCI nod

The Competition Commission of India (CCI) has given unconditional clearance for Japanese firm Mitsui's acquisition of 26.71-per cent stake in Indian biopharmaceutical firm Arch Pharmalabs. This is the first pharmaceutical sector deal cleared by the fair trade regulator.

In an order dated 19 September and released on Friday, CCI said the proposed acquisition of a further 26.71-per cent stake by Mitsui in Arch "is not likely to create any adverse competition concern". With this, Mitsui's total stake in Arch Pharma will increase to 31.96 per cent, as it already holds 5.25 per cent.

Mitsui and Arch were represented before the CCI by leading law firm Amarchand Mangaldas of Delhi.

"Given the intense debate surrounding regulation of mergers and acquisitions &A activity in the pharmaceutical sector in the recent past, this order marks the first approval by the CCI of a transaction in the pharmaceutical sector," the law firm said in a statement.

Arch is a biopharmaceutical company engaged in the manufacture and sale of active pharmaceutical ingredients (API), which are the principal ingredients used in making finished drug dosages in form of capsules, tablets, liquid or other forms of drug dosage.

Mitsui through its Japan-based subsidiary MicroBiopharm is engaged in the manufacture, contract manufacturing and sales of APIs globally.  However, MicroBiopharm does not have a presence in India.

CCI observed that Mitsui does not have any direct or indirect control in any other enterprise in India which is engaged in the business similar to that of Arch in India.

Mitsui sells two products to Arch, one of which is used as raw material in contract manufacturing by Arch and the other is used by Arch as a utility material in running a production line.

Further, Mitsui through one of its Indian subsidiaries buys some materials from Arch and trades it to the parent firm in Japan for resale to other companies in Japan and elsewhere.

However, CCI said the said vertical relation between Mitsui and Arch is not of any significance.

CCI noted that Mitsui and Arch are not engaged in production, supply, distribution, storage, sale or trade of similar or identical or substitutable goods or provision of similar or identical or substitutable services in India.

The companies had approached CCI last month, seeking its clearance for the deal.