SINGAPORE--Lupin is now allowed to sell off up to 49% of the company--if it decides it wants to--in a deal or deals that could be worth more than $1 billion. At Lupin's request, India's Cabinet decided to raise the cap on foreign investment in the company; previously, Lupin was allowed to sell up to a 33% stake.
The Cabinet's endorsement came a week after multinational drugmakers pressed President Barack Obama to negotiate an end to foreign investment limits in India's pharma industry. Just before his visit to mark the country's Republic Day on Jan. 26, the Organisation of Pharma Producers of India (OPPI), which represents foreign drugmakers, lobbied for the change.
The OPPI also wants India to remove a ban on do-not-compete clauses in mergers and acquisitions, but the Cabinet's decision didn't address that issue. India's current Foreign Direct Investment (FDI) law allows automatic 100% foreign investment in new ventures, but officials must review proposed investments in existing businesses that exceed $995.4 million.
Neither Lupin nor India's HDFC Bank, which handled the company's request for a higher FDI cap, mentioned prospective investors. The decision could help Lupin attract $1.14 billion in additional foreign investment.