In the high-stakes world of Private Equity Investment, the limelight rarely comes, but when it does, it’s like an Olympic victory celebrated by all. This narrative explores the intricate tale of Fosun’s attempt to acquire Gland Pharma, a saga filled with geopolitical manoeuvrings, strategic business decisions, and the unforeseen impact of global events.
The VC FOMO era
I joined Fosun when Venture Capital Fear Of Missing Out (VC FOMO) was at its peak, and Chinese investors were replacing the American VC dominance with their aggressive investment strategies. This period marked a significant shift in the global investment landscape, with Chinese capital competing with its American counterpart and among itself in a race to back the most promising ventures.
The copycat model
The investment strategy often revolved around a simple yet ambitious principle: if a business model succeeded in China, it could be replicated in India. This approach, reminiscent of the “copy-paste” tactics criticised in academic circles, was emblematic of the intense competition and ambition driving Chinese investment firms.
Fosun’s strategic ambitions
- State-driven investment agenda
At Fosun, I gained insights into how investments could serve broader state-driven objectives. The firm’s determination to acquire Gland Pharma was not just about financial returns but also involved strategic considerations beyond conventional investment wisdom.
- The pursuit of Gland Pharma
Fosun’s offer for Gland Pharma was staggering, valuing the company at nearly 1.5 times its market value, a clear indication of the strategic importance Fosun placed on this acquisition. This move was driven by a desire to gain a foothold in the lucrative markets of the USA and Europe, where Gland Pharma had valuable licenses to export pharmaceuticals, a privilege Chinese companies lacked.
Geopolitical implications and government intervention
The Indian government, led by Finance Minister Arun Jaitley and the BJP, scrutinized the deal, recognizing its implications beyond mere business interests. The decision to block Fosun’s acquisition underscored a deeper understanding of the strategic dimensions of such investments.
The narrative takes an unexpected turn with the outbreak of Covid-19, tracing Fosun’s investments in vaccine development through collaborations with BioNTech and Pfizer. This sequence of events highlights how the attempted acquisition of Gland Pharma was part of a larger strategy to dominate the global vaccine distribution network.
Reflections and realisations
The government’s intervention, seen through the prism of the pandemic and the geopolitical landscape, reveals a level of foresight and strategic thinking aimed at protecting national interests and ensuring self-reliance in critical sectors.
Looking back, the entire episode illuminates the often superficial and transactional nature of the investment industry, which is overshadowed by the deeper strategic considerations of national policy and security.
A Broader perspective
The saga of Gland Pharma’s acquisition bid serves as a reminder of the complex interplay between business interests, national security, and the global geopolitical environment. It underscores the importance of looking beyond immediate financial gains towards the broader implications of investment decisions.
The curious case of Gland Pharma’s acquisition by Fosun is more than just a business deal gone awry. It is a story of strategic interests, government intervention, and the unforeseen impact of global events on local economies. This tale offers valuable lessons on the importance of understanding the broader implications of investment decisions and the role of government in safeguarding national interests. Jai Hind.
