US buyout firm KKR to invest $200 mn in Gland Pharma

US buyout firm KKR & Co LP has agreed to a $200-million investment in drugmaker Gland Pharma Ltd, making it the largest private equity investment in the local pharmaceutical sector as demand for generic drugs grows in overseas markets, The Economic Times reported today.

Under the deal, KKR would acquire a minority holding in Gland Pharma, which would include the stake held by private equity fund Evolvence India Life Science Fund, the company said in a statement on today. The size of the stake has not been disclosed.

According to commentators, the US company's latest investment in India points to the positive outlook for generic drugmakers, even as concerns remain about manufacturing quality following the recent crackdown by overseas regulators including the US Food and Drug Administration.

In a similar move, private equity firm Actis, last month, invested $48 million in Symbiotec Pharmalab Ltd, a producer of steroid-hormone active pharmaceutical ingredients in India.

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

KKR's minority stake acquisition for $200 million would also include acquisition of the entire stake held by Evolvence India Life Sciences Fund (EILSF), an existing private equity investor in Gland Pharma.

Hyderabad-based, Gland Pharma, develops and manufactures generic injectables primarily for the US market, and also for India and other semi-regulated markets.

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.

According to KKR, with the pioneering of Heparin technology, Gland Pharma, had a strong position in the US market.

According to KKR India chief executive officer Sanjay Nayar, Gland Pharma had a track record of strong financial performance as also long standing relationships with Indian and international pharmaceutical companies and KKR believed there was significant potential for it to grow these partnerships even further.