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The Competition Commission of India approves the acquisition of Tianish Laboratories Private Limited by Matrix Pharma Private Limited alongside the investment in optionally convertible debentures by Kotak Strategic Situations India Fund II and Kotak Alternate Asset Managers Limited. The combination includes the acquisition of the active pharmaceutical ingredients manufacturing business of Mylan Laboratories Limited. The Commission concludes that the combination does not create any appreciable adverse effect on competition because the target company exports its production and maintains a nil market share in India. This approval is subject to revocation if the information provided by the acquirers is incorrect.
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COMPETITION COMMISSION OF INDIA Combination Registration No. 2024/01/1100
13th February 2024
Notice under Section 6(2) of the Competition Act, 2002 filed by Matrix Pharma Private Limited, Kotak Strategic Situations India Fund II and Kotak Alternate Asset Managers Limited.
CORAM:
Ms. Ravneet Kaur Chairperson
Mr. Anil Agrawal Member
Ms. Sweta Kakkad Member
Mr. Deepak Anurag Member
Order under Section 31(1) of the Competition Act, 2002
On $3^{\text{rd}}$ January 2024, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by Matrix Pharma Private Limited (Acquirer), Kotak Strategic Situations India Fund II (Investor 1) and Kotak Alternate Asset Managers Limited (KAAML/ Investor 2) [Hereinafter Investor 1 and Investor 2 are collectively referred to as the ‘Investors’. Acquirer and Investors are collectively referred to as the ‘Acquirers’].
The notice has been filed pursuant to the Share Purchase Agreement dated $1^{\text{st}}$ October 2023 (SPA) entered into between the Acquirer, Tianish Laboratories Private Limited (Target), IQuest Enterprises Private Limited (IQuest), Viatris Inc., Mylan India, Mylan Luxembourg 2 S.A.R.L., M.P. Laboratories (Mauritius) Ltd. and Mylan Group B.V. and a binding term sheet dated $25^{\text{th}}$ August 2023 (Termsheet) entered into by KAAML, the investment manager of Investor 1, with IQuest, an affiliate of the Acquirer.
The proposed combination relates to (i) acquisition of 100% of the issued and paid-up equity share capital of the Target (on a fully diluted basis) by the Acquirer (Proposed Acquisition) and (ii) subscription to optionally convertible debentures of the Acquirer by the Investors (Proposed Investment), investment proceeds of which will be utilized by the Acquirer for its acquisition of the Target in the Proposed Acquisition. It is stated in the notice that the acquisition of the Target by the Acquirer is contingent upon investment by the Investors in the Acquirer, and hence the Proposed Investment is inter-connected with the Proposed Acquisition [Proposed Combination].
In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, the Commission, vide communication dated $15^{\text{th}}$ January 2024, sought certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on $23^{\text{rd}}$ January 2024.
The Acquirer is a private limited company incorporated in India in 2022 for the purpose of acquisition of the Active Pharmaceutical Ingredients manufacturing business (API Business) of Mylan Laboratories Limited (Mylan India). The Acquirer does not presently carry out any business activity either in India or outside India. It is owned and controlled by Mr. Venkata Pranav Reddy Gunupati (Pranav) and his wife, Mrs. Swathi Reddy Gunupati (Swathi), who collectively hold 99.26% of the shareholding of the Acquirer. The entities over which Pranav and Swathi (including with their family members) have: (a) direct or indirect shareholding of 10% or more; or (b) a right or ability to exercise any right not available to ordinary shareholders (including any advantage of a commercial nature); or (c) a right or ability to nominate a director or observer, have been considered as the ‘Acquirer Group’.
Investor 1 is a scheme of Kotak Strategic Situations Trust, a trust set up under the Indian Trust Act, 1882, and registered with Securities and Exchange Board of India (SEBI) as a Category-II Alternate Investment Fund (Cat II- AIF). It is engaged in the business of investing in companies with a sector agnostic approach and its investment objective is to generate target returns by investing in opportunities in India. It does not offer any products or services as it is an investment fund.
KAAML is the settlor and manager of Investor 1. Kotak Mahindra Bank Limited holds, directly and indirectly, 100% of its shareholding. It acts as an investment manager, inter alia, engaged in the business of managing and advising funds across various asset classes namely: (a) special situations; (b) real estate; (c) infrastructure; (d) private equity; and (e) private credit. It curates and manages investment products for investors and also provides non-binding investment advisory services to high net-worth individual clients.
The Target is a private limited company incorporated in India in 2023. It is a wholly owned subsidiary of Mylan India, which in turn is an indirect subsidiary of Viatris Inc. (Viatris), the ultimate parent company of the Viatris group (Viatris Group). The Target does not have any subsidiaries or affiliates and currently does not undertake any commercial activity in or outside India. Post the scheme of demerger of Mylan India becoming effective, the Target will take over the API Business of Mylan India. Upon completion of the transfer of the API Business to the Target, it would be engaged in the business of manufacturing APIs in India, and would have a total portfolio of around 290 APIs.
It is submitted in the notice that there are no overlaps between the Target on the one hand and the Acquirer or any other entity forming part of the Acquirer Group and the Investors or their ultimate parent entity or portfolio companies$^1$ on the other hand,. However, Biocon (one of the portfolio companies of Kotak Special Situations Fund (another fund managed by Investor 2) exhibit certain overlaps with business activities of the Target.
It is stated in the notice that Biocon is engaged in the business of manufacturing APIs in India, of which 13 APIs exhibit a horizontal overlap with the APIs in the Target’s portfolio. Accordingly, the relevant market at the broad level is defined as ‘Market for manufacture and sale of APIs in India’ (Broad Market) and at the narrow level, the markets for manufacture and sale of each of the overlapping APIs in India have been identified as: (i) market for manufacture and sale of Apixaban in India (Apixaban Market); (ii) market for manufacture and sale of Atorvastatin in India (Atorvastatin Market), (iii) market for manufacture and sale of Dapagliflozin in India (Dapagliflozin Market), (iv) market for manufacture and sale of Empagliflozin in India (Empagliflozin Market), (v) market for manufacture and sale of Fingolimod in India (Fingolimod Market), (vi) market for manufacture and sale of Lenalidomide in India (Lenalidomide Market), (vii) market for manufacture and sale of Linagliptin in India (Linagliptin Market), (viii) market for manufacture and sale of Liraglutide in India (Liraglutide Market), (ix) market for manufacture and sale of Rivaroxaban in India (Rivaroxaban Market), (x) market for manufacture and sale of Rosuvastatin in India (Rosuvastatin Market), (xi) market for manufacture and sale of Sacubitril / Valsartan in India (Sacubitril / Valsartan Market), (xii) market for manufacture and sale of Semaglutide in India (Semaglutide Market), and (xiii) market for manufacture and sale of Sitagliptin in India (Sitagliptin Market) [Hereinafter, the relevant markets at the narrow level are together referred to as the ‘Narrow Markets’].
$^1$ The Parties have confirmed that for the purposes of the Notice, overlaps have been mapped between the Target and the Acquirers as well as (a) all entities forming part of the Acquirer Group; (b) the ultimate parent entity of Investor 2, i.e., Kotak Mahindra Bank Limited, and the entities forming part of Kotak Mahindra Bank Limited’s group; and (c) the portfolio companies (i.e., on account of holding equity instruments, non-convertible debentures and / or OCDS of such portfolio companies) of Investor 1 and other funds managed by Investor 2 in which any of the Investors has (i) direct or indirect shareholding of 10% or more; or (ii) a right or ability to exercise any right (including any advantage of commercial nature with any of the party or its affiliates) that is not available to an ordinary shareholder; or (iii) a right or ability to nominate a director or observer.
