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Mylan's Agila deal moves forward, but next buyers may not be so lucky

Trade minister says Mylan deal will be approved, but new investment restrictions will be considered
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India's prime minister overrode a government department to support Mylan's ($MYL) $1.6 billion deal to buy Agila Specialties, but buyers who come in behind this may find new limits on outside investments. Trade Minister Anand Sharma said deals on the table will be approved, but the government also will consider putting new restrictions on direct foreign investment to make sure generic versions of some critical drugs remain available.

"We have a policy in place. If there are issues raised, those would be discussed and if need be to put in additional safeguards or some conditions. But as per the proposals which have been scrutinized and approved, they will go through ... they will be approved," Sharma told an Indian television station, according to domain-b.com.

After overriding the Department of Industrial Policy and Promotion's (DIPP) hesitation on the Mylan deal, Prime Minister Manmohan Singh on Friday asked the agency to offer up what changes it believes need to be made to investment regulations to assure a steady supply of critical meds, Sharma told The Wall Street Journal. The trade minister explained that there are concerns that foreign drugmakers might redirect operations that currently make generic versions of expensive cancer drugs for the Indian market, instead making more branded drugs for export.

Foreign drugmakers spent $1.1 billion in the last fiscal year on acquisitions of Indian drugmakers. If outside companies bought the three largest Indian drugmakers, they would control 41% of the market, up from about 25% now, The Wall Street Journal reported, citing government statistics. It would take buying the top 11 Indian firms for them to control more than 50%.

DIPP last month balked at approving Mylan's deal to buy the sterile injectables unit of India's Strides Arcolab. In response, the U.S. generic drugmaker submitted a filing saying it intended to expand Agila's production of injectable drugs in the Indian market. It said by 2017 it would boost Agila's capacity for the Indian market to 600 million units from the 180 million units it sells today.

The consideration of new investment restrictions comes amid a push by the Indian government to make affordable cancer meds more widely available, often stepping on Westerns' intellectual property in the process. On Thursday, Swiss drugmaker Roche ($RHHBY) said it would not fight India's decision to withdraw its patents on its Herceptin breast cancer drug. The Indian Supreme Court recently denied patent protection to Novartis' ($NVS) blood cancer treatment Glivec. Patent officials also rejected AstraZeneca's ($AZN) bid for IP protections on its cancer drug Iressa. The government is considering handing out more compulsory licenses, for Herceptin and Bristol-Myers Squibb's ($BMY) leukemia drug Sprycel and breast cancer drug Ixempra. It has gotten to the point that U.S. Secretary of State John Kerry and Vice President Joe Biden both raised U.S. concerns about the practices during their visits to India.

- here's the domain-b.com story
- read the Wall Street Journal story (sub. req.)

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