Shanghai Fosun Pharmaceutical (Group) Co Ltd announced that it will acquire an 86.08 percent stake in Indian pharmaceutical enterprise Gland Pharma Ltd for $1.26 billion, in the largest overseas acquisition by a Chinese pharmaceutical company.
Gland Pharma, one of world's largest providers of injectable generic medicines, will remain headquartered in Hyderabad after the acquisition, and P.V.N. Raju, founder of Gland Pharma, and his son Ravi Penmetsa, will continue to be on the board. Penmetsa will continue to serve as managing director and CEO. The family will retain a stake in the company after the acquisition, according to the announcement.
The deal also included a payment of no more than $50 million, contingent on Gland Pharma's Enoxaparin sales in the US market.
Chen Qiyu, chairman of Fosun Pharma, said the deal will strengthen the company's global presence and accelerate its internationalization.
"It will enable us to provide more high-quality products and services to our patients worldwide. Fosun Pharma is dedicated to implementing our investment model of 'Combining China's Growth Momentum with Global Resources' with the win-win cooperation with Gland Pharma," said Chen.
China's pharmaceutical and healthcare enterprises have been expanding their appetites for acquiring stakes in overseas enterprises, particularly in fields of pharmaceuticals, biotechnologies and hospital assets, said market researchers.
According to data from Shanghai-based Wind Information, a financial information services provider, listed domestic players in healthcare and pharmaceuticals have reportedly acquired $3.9 billion total stakes in overseas companies in the first half of 2016, more than that of the entire year in 2015 and about tenfold the 2012 level.
Yan Tianyi, a researcher with Shenwan Hongyuan Securities Co, said a trend observed from these Chinese healthcare and pharmaceutical companies acquiring stakes in foreign companies is that Chinese buyers tend to look at those with proven overseas market demand, mature technologies and great potential for Chinese market demand.
Opportunities for buyers include pharmaceuticals, research and development resources, diagnosis and treatment technologies and internet-based information analysis, according to a research note from Shenwan Hongyuan Securities.
Gao Ting, head of China strategy at UBS Securities Co, said that as domestic enterprises take up going global strategies, more enterprises will look at opportunities to leverage resources from the overseas market, bringing more technologies, products and services into the domestic market to meet upgraded consumer demands.
Healthcare is one of the major sectors that will see more deals following this trend.
