GlaxoSmithKline has paid £625m to increase ownership of its Indian subsidiary in a sign of commitment to the country despite tensions between western drugmakers and New Delhi over patents and pricing.

The UK-based group raised its stake in Mumbai-listed GlaxoSmithKline Pharmaceuticals from 50.7 per cent to 75 per cent for Rs64bn after a tender offer.

David Redfern, GSK’s chief strategy officer, described the deal as “a significant vote of confidence” in growth prospects for the “strategically important” Indian market.

GSK has remained positive about India even as some rival groups have warned that the country’s turbulent regulatory environment was deterring investment.

India has battled with big pharma over patents and pricing as authorities seek to widen access to cheaper, locally made generic drugs in a country where 75 per cent of healthcare expenses are borne directly by patients.

Price controls were imposed last year on more than 350 drugs, including GSK’s branded antibiotic Augmentin, its best-selling product in India.

However, such moves appear to have done little to cool GSK’s enthusiasm for a market that accounts for a quarter of the group’s global medicine and consumer healthcare volume.

Andrew Witty, chief executive, has put India at the heart of a broader strategy to sharpen focus on emerging markets, betting that steadily increased spending on healthcare in the developing world will offset pressure on pricing.

GSK has been active in India for more than 100 years as the maker of Horlicks, the malt-based nutritional drink that is one of the country’s most popular brands.

While other industry leaders have issued warnings to New Delhi over intellectual property rights, Mr Witty has adopted a more emollient tone.

He recently said that the industry needed to work “hand-in-hand” with India to develop pricing models that ensured wide access for drugs. “I don’t believe in any need for a more assertive stance, and this is a situation where constructive engagement is the way forward,” he said.

GSK employs about 8,000 people in India and last year announced plans for a £85m manufacturing plant, likely to be located in Bangalore, on top of the five facilities it already has in the country.

The group paid Rs3,100 per share for its increased stake in the Indian pharma business, representing a 26 per cent premium over the closing price before the offer was announced in December.

In 2012, its most recent full financial year, the unit produced sales of Rs26bn and pre-tax profits of Rs9.8bn.

The move for greater control follows a similar deal last year to raise its stake in its Indian consumer business from 43 per cent to 72.5 per cent.

Other multinational groups have also increased exposure to Indian subsidiaries, including Unilever, which spent €2.5bn last year to raise its stake in Hindustan Lever.

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