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Time ticking for the Fosun-Gland deal

The clock is ticking and by end of September this year, there needs to be some clarity on the big pharma M&A deal of last year.

twitter-logo E Kumar Sharma   New Delhi     Last Updated: August 31, 2017  | 16:11 IST
Time ticking for the Fosun-Gland deal

The clock is ticking and by end of September this year, there needs to be some clarity on the big pharma M&A deal of last year. The $ 1.3 billion Fosun-Gland Pharma deal is back in news as the agreement between the two parties is to expire by end of September. Already there are report in media, speculating on whether the deal will go through its last hurdle of getting the approval from the Cabinet Committee on Economic Affairs (CCEA), and if it does not then what could be the options before the companies, including perhaps reworking the deal and to reduce the Chinese company's stake from 86 to 74 per cent, since upto 74 per cent stake is cleared through the automatic route.

But then, it may not be so simple as the two companies would have gone for it in the first place if it was a possibility. While, instead of speculating on the maybe's, we may need to wait for the official word. However, what cannot be ignored is the long wait the whole process has involved.   

The deal, announced in July last year, had Chinese company Shanghai Fosun Pharmaceutical Group, opting to acquire a controlling stake of 86 per cent in Hyderabad-headquartered Gland Pharma for $1.26 billion. It has been through the cycle of seeking regulatory clearances and so far has been cleared by the CCI (Competition Commission of India) and subsequently also by the Foreign Investment Promotion Board (FIPB) last March. Since then, it has been awaiting the approval from the CCEA.

Soon after the deal, when Business Today wrote about it, some experts did point out that  the deal could well be a "test case for the government of India in special verticals, such as injectables, and would depend on who within the Indian government today would do the advocacy for a Chinese company in the current political atmosphere."

What will be the final view of the CCEA and what factors will play a role in arriving at the decision - either in favour or against - still needs to be seen. For the moment, only the clock is  ticking.

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