Buyout firms Advent International, Baring Private Equity Asia (now owned by EQT), Bain Capital, Blackstone, Carlyle and KKR are among those who have been approached to buy the Fosun-owned Gland Pharma, in what would be one of the largest pharma deals in the country, said multiple people aware of developments. Chinese billionaire Guo Guangchang’s Shanghai Fosun Pharmaceutical Group is the controlling shareholder of listed generic injectables maker Gland, with 57.86% stake. The buyout will trigger an open offer for an additional 26% of the company. Gland shares ended flat on the BSE on Monday, at Rs 1,714.55 per unit, pegging its market capitalisation at Rs 28,236.96 crore ($3.5 billion). The scrip has fallen by 53% this year.
Fosun Pharma acquired 74% in Gland for about $1.1 billion in 2017 from an investor group that included PE major KKR. It listed the business three years later in a Rs 6,480-crore initial public offering. It has now mandated Morgan Stanley to find a buyer. Discussions are still at a preliminary stage and the significant control premium sought by the seller is believed to be a potential roadblock, said analysts tracking developments. Mails to Fosun did not generate a response till press time on Monday. Srinivas Sadu, managing director and chief executive of Gland Pharma, did not reply to text messages. Advent, Bain, Blackstone, Carlyle, KKR declined to comment. Mails to Baring PE Asia did not elicit any response.
Sources reported on November 29 that Fosun was considering selling Gland Pharma. Cash from the sale will help the troubled Fosun Group prune its portfolio and deleverage its bloated balance sheet. Fosun International has been exploring options for a number of assets, including French resort operator Club Med and some domestic food and beverage operations. China’s biggest banks and state-owned companies have been told to check their financial exposure to Fosun, the sprawling conglomerate that owns English football club Wolverhampton Wanderers. Heavily debt-laden, the group is struggling from the impact of the downturn in the property sector in its home market. The financial strength of the Shanghai-based group, co-founded in 1992, came under the spotlight after the sell-off in property bonds that began in June.
Dollar bonds guaranteed by the Hong Kong-listed Fosun International plummeted, as its share fell to a 10-year low. Hyderabad-based Gland specialises in injectable antibiotics and drugs focusing on oncology and cardiology. It has a presence in about 60 countries, according to its website. The US, Canada, Europe and Australia are Gland Pharma’s core markets. As of September 30, 2022, Gland and its subsidiaries had 322 abbreviated new drug application (ANDA) filings in the US, of which 259 were approved and 63 were pending, according to a company presentation.
The India market accounted for 7% of total sales during the second quarter of this fiscal year. Gland posted revenues of Rs 4,400.71 crore and a net profit of Rs 1,212.16 crore in FY22. "Gland is a B2B player so there will be a huge conflict of interest for Indian companies like Sun, Cipla to buy since Gland is supplying to their competitors. Its largely a PE play or some of the European CDMO players like Carlyle backed Curia, Recipharm, Siegfried Holding may look into it. They are also larger in size and are also B2B peers,” said analyst who did not wish to be quoted. The firm in November said it will buy French pharmaceutical firm Cenexi for 120 million euros (approximately Rs 1,015 crore) as it looks to expand its presence in the European markets, enhancing its contract manufacturing (CDMO) offerings in the Europe market.
The acquisition would also provide the company with the technical know-how in sterile forms, including ophthalmic gel, needleless injectors, and hormones, as per domestic brokerage and research firm Motilal Oswal.
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