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India set to block $1.3 bln Gland Pharma-Fosun deal

01 Août 2017

The acquisition is still subject to the review and approval of India's Cabinet Committee on Economic Affairs, so the termination date has been further extended to September 26, the filing shows.

Top government officials on Monday dismissed media reports that the decision was linked to the current border stand-off between the two countries.

According to Economic Times, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has chose to block the Chinese firm's purchase of an 86 per cent stake in Gland Pharma.

Shanghai Fosun Chairman Chen Qiyu said in a filing to the Hong Kong bourse on Tuesday that India had not informed Gland Pharma of the result of its review of the acquisition.

Representatives for Gland Pharma and KKR did not respond to requests for comment.

The deal will be called off when tensions between India and China have escalated amid a renewed spat over territory in Sikkim, one of the most serious flare ups since a war in 1962.

A Fosun spokeswoman told us "The acquisition obtained prior approval from relevant PRC authorities, and is pending review and approval from the Cabinet Committee on Economic Affairs of India".

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Chinese drugmakers have grown more ambitious in seeking deals that will give them access to the USA, the world's biggest pharmaceutical market.

India exported about US$9 billion worth of products to China past year, but imported US$60 billion, generating a trade deficit of US$51.7 billion, according to Indian government data. Valeant Pharmaceuticals International Inc. this year sold its Dendreon Pharmaceuticals unit to Chinese conglomerate Sanpower Group Co. for $820 million.

Other Chinese companies that have been investing in India include Alibaba Group, Tencent Holdings and Xiaomi Corp.

Alibaba's finance unit is on the board of Paytm, India's largest digital payments start-up, and Tencent owns an interest in Flipkart.

The Times of India also reported that Gland Pharma had a lead in injectables, an area where Chinese firms lag Indian pharma companies.

Shanghai Fosun Pharmaceutical's plan was to acquire stake in Gland Pharma through its subsidiaries outside India, namely Fosun Pharma Industrial Ltd, Fosun Industrial Co.

India set to block $1.3 bln Gland Pharma-Fosun deal