Why is Gland Pharma citing India-China ties as key risk to IPO | Economic Times

New Delhi: Gland Pharma has flagged evolving India-China political relations as a risk factor in a red herring prospectus (RHP) filed with markets regulator Securities and Exchange Board of India in the run-up to the launch of a Rs 6,480 crore initial public offering (IPO) of shares that opened to the public on Monday. The ongoing IPO is touted as potentially the largest such fundraise by a pharma company.The pharma company that is majority-owned by Chinese conglomerate Fosun International has noted in its filings with Sebi that it could face supply disruptions in the future arising from the border confrontation that took place between India and China on June 20.“Any degradation in India-China political relations or any future military confrontations could result in curbs or delays on the import from China into India of materials and equipment that we require to operate our business, increase in duties on imports from China into India, curbs on the export of finished products from India to China, and negative public sentiment within India toward Chinese-owned companies such as our company,” the company noted in its filings with the market regulator.Gland Pharma also noted that it was dependent on supplies of active pharmaceutical ingredients from China and these had been disrupted during the Covid pandemic. When contacted, the company said it was addressing the risks that could emanate from potential supply disruptions.“Our raw materials imported from China constituted 37.26% of our total raw material purchases in fiscal 2018, 52.27% of our total raw material purchases in fiscal 2019 and 33.27% of our total raw material purchases in fiscal 2020,” the company said.Gland Pharma noted that it had planned spends to purchase additional equipment and was investing in its API production. “Our ability to manufacture our own API enhances our vertical integration strategy particularly for API’s, which are difficult to source, and allows us to develop products that other companies may not focus on due to uncertainty of API supply,” the company said.Gland Pharma’s IPO entered its second day of subscription on Tuesday. The IPO is open for subscription till Wednesday.