‘Cab­i­net Yet to De­cide on Fo­sun-Gland Deal’

The Economic Times - - Companies: Pursuit Of Profit - Our Bu­reau

New Delhi: The Cab­i­net Com­mit­tee on Eco­nomic Af­fairs (CCEA) has not yet taken a call on the Gland Pharma-Fo­sun deal, a gov­ern­ment of­fi­cial told ET.

The pro­posal was listed for CCEA’s con­sid­er­a­tion two weeks back but could not be taken up.

“It is wrong to say that the deal has been re­jected,” the of­fi­cial said. There have been re­ports that the CCEA has re­jected Chi­nese firm Shang­hai Fo­sun Phar­ma­ceu­ti­cal’s pro­posed $1.3 bil­lion takeover of In­dian pharma firm Gland Pharma.

There is spec­u­la­tion that the deal has got stalled be­cause of the height­ened In­dia-China bor­der ten­sions.

The now-abol­ished For­eign In­vest- ment Pro­mo­tion Board (FIPB) had in March this year ap­proved Fo­sun’s pro­posal to ac­quire 86% stake in the in­jectable drug­maker. This in­cluded 36% stake held by KKR & Co. The deal was an­nounced in July 2016. The cur­rent FDI pol­icy al­lows 100% FDI in brown­field pharma (ac­qui­si­tion of stakes in ex­ist­ing pharma com­pa­nies), but is sub­ject to gov­ern­ment ap­proval. This con­di­tion was im­posed fol­low­ing con­cerns that large scale buy­out of In­dian pharma com­pa­nies by MNCs will re­duce sup­ply of cheap medicines.

Such ac­qui­si­tions are fi­nally cleared by the CCEA.

In a Hong Kong stock ex­change fil­ing on July 27, Fo­sun had said “…the ap­provals of the rel­e­vant PRC au­thor­i­ties in re­spect of the ac­qui­si­tion have been ob­tained and the United States anti-trust fil­ings and the In­dian anti-trust fil­ings have been com­pleted.”

“In ad­di­tion, the ac­qui­si­tion was re­viewed by the In­dian For­eign In­vest­ment Pro­mo­tion Board, which has been rec­om­mended to the Cab­i­net Com­mit­tee on Eco­nomic Af­fairs of In­dia for fur­ther re­view,”it said adding that the ter­mi­na­tion date has been ex­tended to Septem­ber 26, 2017.

The of­fi­cial did not say if the CCEA would take up the pro­posal in its next meet­ing.A fi­nance min­istry spokesman had said re­port was ‘to­tally spec­u­la­tive’’ and that it had not come up be­fore CCEA.

There is a spec­u­la­tion that govt may block the $1.3-b deal due to Indo-China ten­sions

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