The proposal made by Shanghai Fosun Pharmaceutical Group is likely to be dismissed amid growing tensions between India and China. The takeover of Gland Pharma by the Chinese giant at US$1.3 billion will most likely to shot down as the two countries remain at a dispute over boundaries. Sources reported at Cabinet Committee on Economic Affairs (CCEA) has rejected the Shanghai Fosun Pharmaceutical Group’s offer to buy an 86% stake in the Indian pharmaceutical company.
The matter has a hush-hush as the information is private. The escalating dispute between India and China could severely impact Fosun Pharma, which intended to acquire the branch of generic injectable medicines and facilities owned by Gland Pharma. The move comes as the Chinese company intends to manufacture products to sell in the U.S.
China-based Drug Makers Bear the Brunt of Tumultuous Political Situation
Fosun Pharma is backed by Guo Guangchang and KKR & Co., an investor group. The tumultuous equation between the two neighboring countries is likely to create a severe setback for the China-based companies that are looking at expansion through mergers and acquisitions. Gland Pharma has made its antitrust filings, which are being renewed by Indian Foreign Investment Promotion Board. However, the company has made no comments about the matter. An emerging trend among the Chinese drug makers is to be a part of the U.S. market, which is currently the biggest pharmaceutical market in terms of production and consumption. This acquisition will only come through after the review and approval by CCEA. This means that the process will be delayed, hampering the plans of the Chinese drug maker.