India Clears Mylan's Bid For Jai Pharma

(RTTNews) - The Indian government on Thursday approved the proposal of global pharma and health major Mylan to invest $750 million in its Indian arm Mylan Laboratories through subscription of equity shares or compulsorily convertible debentures.

This will in turn help Mylan acquire entire shareholding of Taparia family-owned Jai Pharma Ltd post the demerger from its then shareholders.

The approval has been accorded subject to several conditions. The company has to maintain the production level of consumables and NLEM (National List of Essential Medicines) drugs and their supply to the domestic market at the time of induction of FDI over the next five years at an absolute quantitative level.

R&D expenses have to be maintained in value terms for five years at an absolute quantitative level at the time of induction of FDI.

The company receiving FDI will continue to produce medicines under the NLEM for the domestic tariff areas at the level which would be the highest quantity of production in the previous three financial years for the next five years.

The company will also be required to maintain the R&D expenditure at the maximum level incurred in any of the three financial years immediately preceding the year of induction of FDI. This absolute level should be maintained for the next five years.

Second leg of transaction involves infusion of fresh foreign funds by Mylan group for acquiring shares of Jai Pharma Ltd. The taxability of dividend, future capital gains on alienation of shares by the foreign investor, interest income and income of any other nature arising out of the said transaction shall be examined by the field formation.