The approvals from India's Foreign Investment Promotion Board and the Cabinet Committee on Economic Affairs means the acquisition is expected to close in the fourth quarter of 2013.
Agila’s nine manufacturing plants in India, Brazil and Poland are expected to grow Mylan’s injectable contracting capacity and technical capabilities. Shortages of US injectables were cited as one of the causes of Mylan’s decision to push farther into this market.
Mylan CEO Heather Bresch said regarding the recent approvals, "We are very pleased to have received all outstanding Indian pre-merger regulatory approvals for the Agila transaction, especially considering the increased government regulation and oversight with respect to foreign investment in India.”
Foreign Investment Questions
A recent report from the Parliament of India takes specific issue with the growing number of foreign pharma companies’ investments in India, especially as the country now has more than 350 GMP manufacturing sites endorsed by the European Union.
India’s Parliamentary Standing Committee on Commerce notes that the recent spate of acquisitions and mergers of leading Indian pharmaceutical companies by multinational pharma companies has “adversely impacted the accessibility and affordability of drugs for the general public and therefore the Government was compelled to revisit the extant policy of automatic route for FDI in pharma sector.”
Existing policy on foreign investments that allows for 100% “investments in green field and brown field pharma projects have been identified as the major reason behind these acquisitions/takeovers,” the report says.
Mylan’s takeover of Matrix Labs for $736M in 2006 is cited in the report as an example of a major acquisition of a local company.
The committee expresses concern that gradually “there would be a monopoly of around half a dozen big multinational pharma companies with no motivation to serve domestic interests, and no compulsion to comply with local government interests.
“Slowly, because of such dominance [by multi-national companies], or abuse of dominance, entry barriers for new companies will get set higher and higher — no young man or woman would venture to establish a pharma start-up unless he/she has deep pockets,” the report says.
Multinational companies’ business models could “cripple our generic manufacturing capacity as these acquirers would be more interested in promoting their business interests rather than serving public interest.”
The committee says that it fears “the growing dominance” of multi-national pharma companies “would cause us to relapse to the pre 1970 era when we imported 80 percent of our drugs requirement and the prices of these drugs were costlier than what prevailed in USA.”