Largest PE investment in Indian pharma: KKR injects $200 mn into Gland Pharma

Gland Pharma Limited, a Hyderabad-based generic injectable drug maker, hasreached an agreement for selling a minority stake to KKR, a

leading global investment firm, for about $200 million. This marks thelargest private equity investment in the local pharmaceutical sector amid growing demand for generic drugs in overseas markets.

The agreement includes KKR’s acquisition of the entirestake held by Evolvence India Life Sciences Fund, an existingprivate equity investor in Gland Pharma.

Gland Pharma Founder-Chairman P V N Raju said theagreement assumes importance as his company was at animportant stage of evolution.

“Our partnership with KKR will help us in our next phaseof growth as we look to materially expand our manufacturingcapacities and invest more in our development work with thegoal of expanding our product registrations,” Raju said in astatement.

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[caption id=“attachment_806347” align=“alignleft” width=“380”]  U.S. buyout firm KKR & Co LP has agreed to invest about $200 million in drugmaker Gland Pharma Ltd, marking the largest private equity investment in the local pharmaceutical sector amid growing demand for generic drugs in overseas markets. Reuters[/caption]

KKR’S latest investment in India underscores the positive outlook for generic drugmakers, despite some concerns about manufacturing quality after the recent crackdown by overseas regulators including the US Food and Drug Administration.

Private equity firm Actis last month invested $48 million in Symbiotec Pharmalab Ltd, a producer of steroid-hormone active pharmaceutical ingredients in India.Indian drugmakers are among the world’s biggest producers of cheap generic medicines, as developed nations battle rising healthcare costs and big-selling drugs going off-patent in the lucrative U. market.

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The rise in demand for generic drugs has led to closer regulatory scrutiny and a rash of sanctions imposed on top drugmakers including Ranbaxy Laboratories and Wockhardt.

Gland Pharma develops and manufactures generic injectables primarily for selling in the US market and also for India and some other markets.

KKR’s investment in Gland, which is subject to regulatory approvals, will represent the New York-based firm’s second private equity transaction in India this year. KKR has invested about $1 billion in companies in Asia over the last two months.

KKR’s investment in Gland represents its fourth announced investment from its $6 billion Asia fund, which it raised in July to deploy more capital in emerging markets where slowing economic growth has cut overall company valuations.

Private equity investments in India fell 67 percent in the July-September quarter from a year earlier to about $1.3 billion, according to data from sector tracker Venture Intelligence

In 2003, Gland Pharma was the first company in India toget US Food and Drug Administration (FDA) approval forpharmaceutical liquid injectable products, the statement said.Gland Pharma has also pioneered pre-filled syringetechnology in India and export products in this format to theUS market.

KKR India Chief Executive Sanjay Nayar said Gland Pharmahas a track record of strong financial performance as well aslong-standing relationships with Indian and internationalpharmaceutical companies and “we believe there is significantpotential for it to grow these partnerships even further”.

Agencies