The foreign investment promotion board (FIPB) on Tuesday gave the green signal to the $1.85-billion buyout of Bangalore-based Strides Arcolabs injectables arm by Nasdaq-listed Mylan.
Sources said the proposal, over which the department of industrial policy and promotion (DIPP) had expressed some reservations, was a last-minute addition to the board's agenda.
Prime minister Manmohan Singh recentlty directed the ministries concerned to clear all pending brownfield pharma FDI proposals under the current policy.
All pending pharma FDI proposals have been cleared as per the existing policy, said a senior finance ministry official present at the FIPB meeting on Tuesday.
He added that apart from Mylan, two other brownfield foreign investment proposals got the nod, including the Indore based-Symbiotec Pharmalabs plan to sell a 25% stake to private equity fund Actis for around R330 crore and Lotus Surgical Specialities acquisition by Samara Capital for R150 crore.
Mylan was a last-minute addition to the agenda, said the official when asked about the absence of the proposal from the official agenda note for Tuesday's FIPB meeting.
The Mylan deal is the third-largest in the Indian pharma space after Daiichi Sankyos $4.6-billion acquisition of Ranbaxy Labs in 2008 and Abbotts $3.7-billion takeover of Piramal Healthcare in 2010.
A senior commerce ministry official said that the Mylan proposal will now be sent to the Cabinet Committee on Economic Affairs (CCEA) next week for approval. All foreign investment proposals that exceed R1,200 crore are sent to CCEA for approval.
In an inter-ministerial meeting on August 16, Singh had directed the ministries concerned not to hold back pending brownfield pharma FDI proposals from the FIPB citing an attempted re-formulation of the policy.
He also said any new policy should apply to only proposals coming up and not to the current ones.
FIPB on Tuesday also cleared four of the six pharmaceutical proposals on agenda, including Mumbai-based Premier Medical Corporations equity-induction plan and proposals by Gujarat based-Deep Care Health, Ferring Pharmaceuticals and Chennai-based Laurus Labs.