Global buyout firm Advent International and U.S.-based Baxter International (BAX.N) are among suitors preparing to submit separate bids to buy unlisted Indian drugmaker Gland Pharma Ltd, three people with direct knowledge of the matter told Reuters.
A deal would underscore the positive outlook for drugmakers in India, which is a major supplier to the world and counts the United States as its largest export market thanks to lower manufacturing and labor costs.
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.S. market.
Overseas drugmakers as well as private equity firms such as KKR & Co and Singapore’s state investment firm Temasek Holdings have invested in the Indian companies in the recent past to cash in on growing demand for cheaper drugs overseas.
Gland Pharma founders and KKR, who jointly own about 96 percent of the company, are selling their combined stake, which is valued at between $1 billion and $1.5 billion, the people said.
Indian drugmaker Torrent Pharmaceuticals is the other company set to place binding bids due by middle of next month, said the people, who declined to be identified as the deal talks are confidential.
Advent, KKR and Baxter declined to comment. Officials at Gland and Torrent did not respond to Reuters’ request for comment.
KKR invested about $200 million in Gland Pharma in 2013, at that time the largest private equity investment in the local pharmaceutical sector. The stake size was not disclosed, but sources said the company was valued at about $600 million then.
Gland Pharma, based in the southern India city of Hyderabad, makes injectables – widely-used medicines administered through vials, syringes, bags and pumps, which are harder to manufacture than regular medicines.
A shortage of such injectables in recent years has driven up prices and made it an increasingly lucrative business opportunity for drugmakers, sparking investors’ interest in companies such as Gland Pharma.
Drugs giant Pfizer acquired U.S. firm Hospira for $17 billion last year partly to bolster its injectable drugs business.
Mylan NV paid $1.6 billion to buy the injectable drugs unit of India’s Strides Arcolabs – now known as Strides Shasun STSA.NS – in 2013.
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