When $9.4 billion Fosun Pharma acquired a 74% stake in Hyderabad-based Gland Pharma in 2017, it was the largest Chinese takeover of an Indian company. The $1.1 billion deal was something of a coup for Fosun—at the time, Gland, founded in 1979, was coveted by many other large pharma companies, and with good reason.

In 2003, Gland became the first Indian facility to get the US Food and Drug Administration’s (FDA) approval to manufacture and export injectables. It had also earned a reputation for staying on the right side of the regulator by following the FDA’s stringent quality norms. Which is why Fosun paid about 14X Gland’s earnings in the year ended March 2017 to acquire the Indian injectables pioneer. 

It was Fosun’s first deal in Indian Pharma. Fosun RZ Capital, the investment arm of Fosun International, has invested in a handful of Indian startups, including Indian travel and hotel booking aggregator Ixigo and logistics company Delhivery. Fosun’s sister concern Fosun Health Holdings, according to a source in the know, has evaluated investments in hospital chains like Fortis Healthcare, diagnostic chains like Medall Healthcare and even e-pharmacies. Now, Fosun Pharma wants to expand its presence in the Indian pharma sector. Which is why in July, Gland hired investment banks to lay the groundwork for a $500 million initial public offering (IPO).

But why are two profitable, cash-rich companies trying to raise money in the Indian market? An investment banker who Gland consulted says that, to begin with, Fosun wants Gland to have the public image of an Indian company rather than a Chinese one. A public listing would do just that. Not for nothing either, Fosun has been burned in the past. It originally planned to buy a larger share in Gland. First, 96%. Then 86%. Until it settled for a 74% stake largely due to regulations imposed by the Indian government.

Now, to expand beyond Gland, Fosun needs the investment to come from Indian shareholders so it doesn’t have to tip-toe around India’s foreign investment regulations once more.

But even as Gland looks to go public, the landscape around it is changing. The Indian injectables export market is more crowded than ever before. Over the past decade, multiple foreign pharma players—from US pharma majors Mylan and Pfizer to Japanese pharma company Otsuka—have invested in Indian injectables manufacturers.

The likes of Mylan and Pfizer getting into injectables manufacturing on their own doesn’t just mean more competition for Gland. It also means less business. Many pharma companies, including the two US majors that once outsourced their injectables manufacturing to Gland, are now doing it on their own.

The interest in injectables manufacturers didn’t happen out of the blue.