(Yicai) Sept. 7 -- Fosun Pharmaceutical has sold a 6 percent stake in the Chinese drugmaker's Indian unit Gland Pharma via a block trade and open-market transaction for nearly INR28 billion (USD294 million), while remaining the controlling shareholder.

Fosun Pharma's Singaporean unit sold almost 9.9 million shares of Gland Pharma at an average price of INR2,828.78 (USD29.94) apiece, representing a discount of about 2.7 percent from its closing price on Sept. 4, its Shanghai-based parent company said in a stock exchange filing yesterday. Following the deal, its stake will be diluted to 45.8 percent from 51.8 percent.

The move comes after a sharp rally in Gland Pharma's share price. The stock [NSE: GLAND] rebounded to hit a multi-year high of INR3,039.80 at one point last month after falling as low as INR1,573.60 in mid-March. As of 12 p.m. Beijing time today, it climbed 0.6 percent to INR2,950.

The proceeds will mainly be used for research and development, share buybacks, and repayment of interest-bearing debt, Fosun Pharma pointed out. The sale will boost the company's net assets, it added, but noted that because it involves a partial transfer of a controlling subsidiary's equity, it will not be booked as investment gains in its financial report.

Fosun Pharma remains confident in Gland Pharma's long-term development, expecting it to continue serving as a key driver of overseas value, China Business Journal reported, citing the company.

Established in 1978, Hyderabad-based Gland Pharma makes injectable drugs, with most of its revenue coming from the United States and Europe. Fosun Pharma took over the company in October 2017.

However, Gland Pharma's performance has slipped over the past two years amid intensifying US competition and the suspension of some production line upgrades, weighing on Fosun Pharma's overall earnings.

Gland Pharma had total assets of about CNY8.9 billion (USD1.3 billion) as of the end of the first quarter, with net assets attributable to Fosun Pharma of about CNY7.4 billion. In the 12 months ended March 31, it reported net profit of CNY730 million (USD108.8 million) on revenue of CNY4.8 billion.

In a separate announcement on the same day, Fosun Pharma said it plans to buy back Hong Kong shares for up to HKD1 billion (USD127.5 million).

Shares of Fosun Pharma [SHA: 600196] rose 1.2 percent to CNY22.59 (USD3.37) apiece as of lunch break in Shanghai today. Its Hong Kong-listed stock [HKG: 2196] surged 6.7 percent to HKD17.28 (USD2.20).

Editor: Martin Kadiev