Has Mylan's buyout in India hit a wall? The U.S.-based company agreed to pay $1.6 billion for Agila Specialties, the injectables unit of Strides Arcolab. But Indian regulators are said to be skeptical of the deal, worried about foreign ownership of a key producer of cancer meds.
As The Economic Times reports, the Indian body charged with reviewing foreign investment in the pharma industry has deferred a decision on the Mylan ($MYL) deal. In outlining its objections to the buyout, the Department of Industrial Policy and Promotion raised questions about Mylan's commitment to India, the ET says; apparently, the DIPP worries that the U.S. company might shut down a domestic manufacturing plant that turns out cancer drugs.
Strides Arcolab CEO Arun Kumar says the company hasn't been notified of any official hold-up. "It is pure speculation at the moment," Kumar told BusinessToday. "We have not yet been told of any objections and if we do hear we will figure it out and respond as required."
Mylan told Bloomberg that it's proceeding with the deal as planned, without commenting specifically on the ET's report. "We remain confident in our ability to complete the transaction in the fourth quarter of this year," spokeswoman Nina Devlin told the news service.
India has become an increasingly thorny market for foreign pharma companies. Patent authorities have revoked patents, and the government has forced one major drugmaker, Bayer, to license a cancer drug for low-cost production in India. Officials are promising more compulsory licenses on cancer drugs, too.
Meanwhile, the DIPP and the Foreign Investment Promotion Board are screening pharma's deals more closely. Worried about foreign drugmakers' series of local buyouts--including Abbott Laboratories' ($ABT) purchase of Piramal, which made Abbott the country's biggest drugmaker--government officials and the domestic pharma industry say they want to be sure that India's interests are protected.
The concerns about access to Agila's cancer drugs are part and parcel of these developments. Cancer drugs are at the heart of India's compulsory-licensing moves, as the government aims to put newer treatments within reach of India's cash-strapped population.
The deal will probably survive official scrutiny, one analyst told Bloomberg. "[It] could be delayed a few months past its expected 4Q close with Mylan ultimately needing to grant concessions regarding supplying certain types of drugs and certain prices," Barclays analyst Douglas Tsao said in an investor note.