Fosun Pitches For India’s Gland

China’s Shanghai Fosun Pharma has confirmed its interest in the Indian injectables firm Gland Pharma, underscoring how differentiated niche plays continue to attract buyer interest.

Gland Pharma Ltd., owned by the Indian founders, the global investment firm KKR and also backed by the Vetter family of Ravensburg, Germany, has been on the block for some time now, with a number of suitors including Baxter International Inc. and private equity investor Advent International speculated to be in the fray for the Hyderabad-based firm.

KKR acquired a minority stake in Gland Pharma for about $200m in 2013.

But China’s Shanghai Fosun Pharmaceutical Group Co. Ltd. has now made a non-binding proposal for about 96% of Gland, and said that a potential acquisition of the Indian firm would "enhance and improve" its drug manufacturing and R&D capabilities and the "degree of internationalization".

Last year Fosun was reported to have outlined plans to double its cumulative R&D expenditure over the 2016-20 period, amid a buzzing deal track record. Last week, the Fosun group was also said to be among the suitors for ACR Capital Holdings Pte Ltd, the owner of Singapore's biggest reinsurance firm.

Earlier this year, South Korea's Genexine Inc. entered into an agreement with a subsidiary of Shanghai Fosun Pharmaceutical to license out a novel long-acting EPO for anemia (Also see "China Biobetter EPO Deal Seen Boosting Genexine’s Prospects" - Scrip, 16 Feb, 2016.).

Fosun maintained that its non-binding proposal for Gland was still in "a bidding process on a non-exclusive basis", which would need to be confirmed by the relevant parties pending the selection and acceptance by the existing shareholders of Gland.

"In the meantime, Fosun Industrial shall further determine the bidding arrangement based on its due diligence against Gland and its overall evaluation on the future business development of Gland," the Chinese group said.

Fosun declined to share specifics of its interest in Gland including how critical the Indian firm's deal with Sagent Pharmaceuticals Inc. for heparin supplies will be, as well as what role US FDA compliance of its Indian sites may have to the completion of a potential transaction.

"Since the non-binding proposal is still in a bidding process on a non-exclusive basis, we have no further comment apart from the announcement," the company told PharmAsia News’s sister publication Scrip Intelligence.

Gland’s Attractions

Gland, which is said to have pioneered heparin technology in India, claims to have leadership in the GlycosAminoGlycans (GAGs) range of molecules. Sagent and Gland entered into development and supply agreement for heparin in 2008. The initial term of the agreement expires in June 2016, filings made by Sagent with the US SEC indicated.

This is expected to renew through June 2017 on the expiry date of the initial term, a filing made by Sagent earlier this year said, though the latest position on the pact could not be immediately verified.

The SEC filing also referred to Sagent's other supply agreements with Gland covering five currently marketed products - adenosine, amiodarone, chlorothiazide, ondansetron and vancomycin, and additional products currently under review by the US FDA and in initial development.

E-mails to Gland's top executives on the Sagent alliance and the regulatory compliance status of its Indian facilities in the backdrop of a potential deal remained unanswered at the time of going to press.

Asked whether the Vetter family planned to stay invested in Gland or exit, Udo J Vetter, the Indian affairs spokesman of the Vetter family, told Scrip that a sales process is ongoing, "which will be accompanied by the family investors", as the Vetter family has been in an investment relationship with the Penmetsa family for over 23 years. Dr. Penmetsa is the managing director of Gland.

Injectables Deals

While there has been continuing deal interest in the Indian injectables space, experts suggest that the jury is probably still out on how rewarding some of these have been from the buyer's perspective.

The sector has seen a number of transactions over the recent past including Recipharm AB-Nitin Lifesciences Ltd., Mylan NV-Agila Specialties Pvt. Ltd. and Claris Lifesciences Ltd.-Otsuka Pharmaceutical Co. Ltd. and one industry expert said that it would probably be fair to say that not all acquirers have been able to "mint gold".

"Few of them seem to even have intentions to divest a stake," an investment banker told Scrip.

Others, however, maintained that Gland was an "interesting" asset, provided there were no compliance surprises in store.

Valuation expectations for Gland are reported to be in the range of $1-1.5bn; in 2013 Mylan snapped up Strides Arcolab's injectables arm, Agila Specialties, for $1.6bn, plus certain conditional payments.

(This story also appears in Scrip Intelligence. PharmAsia News brings selected complementary coverage from our sister publications to subscribers.)