Big increase in China outbound pharma M&A

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Shanghai Fosun Pharmaceutical (Group), a leading Chinese healthcare provider, will acquire an approximate 86% stake in Indian pharmaceutical company Gland Pharma for US$1.26 billion. This is the largest overseas acquisition ever made by a Chinese pharmaceutical company, and also China’s largest takeover of an Indian company.

news_with_3As of early July 2016, Chinese firms had announced more than US$3.9 billion in overseas acquisitions in the pharmaceutical, biotechnology and healthcare sectors, a 10-fold increase on the amount spent in all of 2012, according to Bloomberg data.

Following the close of the transaction, Gland Pharma will remain headquartered in Hyderabad. P V N Raju, founder of Gland Pharma, and his son, Ravi Penmetsa, will continue to sit on the board, as managing director and chief executive officer. Their family will retain a stake in Gland Pharma.

Chen Qiyu, chairman of Fosun Pharma, said in a statement the Gland Pharma deal would strengthen the firm’s global presence and accelerate the speed of its internationalization. “Fosun Pharma is dedicated to implementing our investment model of ‘combining China’s growth momentum with global resources’ with the win-win co-operation with Gland,” he added.

Established in 1978, Gland Pharma develops and manufactures generic injectables for use in almost 90 countries on five continents, with a focus on the Indian and US markets.

In another deal, Hong Kong-listed Luye Pharma Group acquired Swiss company Acino’s transdermal drug delivery systems. The parties agreed that a carve-out of other business sectors of Acino would be consummated prior to the closing of the transaction. Recently, Shanghai Pharmaceuticals Holding and Primavera Capital Fund II also jointly acquired Vitaco Holdings by way of scheme of arrangement. The deal valued Vitaco at A$313.7 million (US$237 million). Vitaco is a leading sports nutrition and health food business in Australia and New Zealand.

Legal counsel: Khaitan & Co acted for Fosun, with its team led by partner Niren Patel. Troutman Sanders acted as foreign counsel to Fosun Pharmaceutical and its team was led by Shanghai partner Ding Chengfei. Cyril Amarchand Mangaldas acted as legal counsel to Gland Pharma with its team led by Mumbai-based managing partner Cyril Shroff and Bangalore-based partner Reeba Chacko. Simpson Thacher & Bartlett was offshore counsel for Gland Pharma.

K&L Gates acted for Luye on the Acino deal. Its team was led by Frankfurt partner Claudius Paul. Walder Wyss advised Luye on Swiss law. Ashurst advised Luye on Hong Kong capital markets law. Clifford Chance acted for Acino.