Breaking : India approves $1.6bn acquisition of Agila Specialties by Mylan
India’s government has given the go-ahead for US-based pharmaceutical company Mylan’s long-stalled $1.6bn acquisition of Indian vaccine and injectable-drug maker Agila Specialties, after months of internal debate over whether to permit the takeover.
The deal is the latest in a series of high-profile acquisitions of Indian pharmaceutical companies by global groups keen to gain access to their capacity to produce low-cost, high-quality generic medicines.
It finally won the backing of Manmohan Singh, prime minister, against the backdrop of a worsening currency crisis and the urgent need to attract foreign investment to help finance India’s yawning current account deficit.
The $1.6bn acquisition will be one of the largest foreign direct investments in India this year.
Mylan announced in February that it would buy Agila, a developer, manufacturer and marketer of vaccines and generic injectable-drugs active in many global markets.
However, policy makers have grown increasingly nervous about the potential impact on access and affordability of drugs in India’s highly price-sensitive market, resulting in a lengthy delay in approving the Mylan deal.
A speciality unit of Bangalore-based Strides Arcolabs, Agila has nine manufacturing facilities in India, Poland and Brazil, eight of which are approved by the US Federal Drug Administration, allowing it to access the lucrative US market.
Mylan said the acquisition of Agila would enable it to reach new geographies and help make it a global leader in injectable drugs, a sector expected to see robust growth in the next few years as many drugs come off patent.
India’s health and commerce ministries have warned that the takeover could result in shortages of critical cancer drugs, if the company opted to export to more lucrative foreign markets.
In early 2011, the two ministries said they were considering imposing new limits on foreign ownership in the pharmaceutical industry, making it tougher for foreign companies to take control of existing Indian firms.
India’s highly competitive pharmaceutical companies have proved attractive takeover targets. In 2008, Japan’s Daiichi Sankyo paid $3.6bn for Ranbaxy Laboratories, India’s biggest drugmaker, though it later had to take a huge Y359bn ($3.6bn) writedown over the deal following problems with US regulators.
The following year, Sanofi paid €550m for a controlling stake in Indian vaccine-maker Shanta Biotech and in 2010, Abbott Laboratories of the US paid $3.7bn for Piramal Healthcare’s domestic drug formulation business.
