RPG’s pharma business is brewing a recipe for growth

RPG Life Sciences (RPGLS) is a company with a rich legacy and the energy of a startup. The air in the organisation is ripe with vibrancy and an eagerness that is hard to miss, inspiring employees to outperform and contribute towards a greater purpose.

The integrated pharmaceutical company established its presence in India in 1968 through a joint venture with GD Searle, USA, and was later wholly acquired by RPG Group in 1993.

With a footprint in over 50 countries, RPGLS has a product portfolio encompassing 10 therapy areas and three manufacturing plants in Maharashtra and Gujarat. While its India business contributes to nearly two-thirds of the turnover, exports make up for the rest. The company’s operations are divided into three business segments — Domestic Formulations (DF), International Formulations (IF) and APIs, with domestic formulations contributing to over 60% of the business.

The last four years have ushered in a new sense of purpose, infused energy and confidence at the company. With a new strategy and leader at the helm, RPGLS’ unwavering focus on business fundamentals, sales, margins and profits have yielded significant results. The company has been consistently growing faster than the industry — 20% against the pharma sector’s 6.6% growth rate and gaining steady market share as per AIOCD AWACS, a pharmaceutical market research organisation. On the profit front, there has been a remarkable turn-around, while PBT has grown 5X, margins have also leapfrogged from 4% in FY19 to 19.4% in H1 FY23, creating new benchmarks each year. During this period, RPGLS has not only paid back its debt but has also become a cash surplus company.

Yugal Sikri, Managing Director, RPGLS, attributes the success to the company’s uniqueness, lending it an extra edge in the highly competitive industry. “What makes RPGLS unique is that it’s a small/mid-sized pharma company with the expanse and complexities of a large pharma organisation. It manufactures and markets both APIs and Formulations; its products are sold in both regulated and emerging markets; its Domestic Formulations business has both mass and specialty products; its brand portfolio has both global and local brands; it has its own evolved back-end ie., research & development, regulatory department, project management setup, etc. All of these, while adding to the complexity of the organisation also present a gamut of opportunities for us to strategise and encash upon. Our strategy clearly defines our short-term, mid-term and long-term transformation agenda, prioritisation grid and action blueprint.”

Today, the company has a clear mandate to focus on profitability.

For the biggest and the topmost priority segment — the Domestic Formulations business — the team has identified five pillars of growth:

1. Product Portfolio Transformation: The company has entered into new therapies, such as Rheumatology and new product classes, such as Biologics and Biosimilars. Yugal explains, “As a legacy company with several products that are nearly four to five decades old, RPGLS is reinventing itself by launching a modern portfolio in line with the global move from chemicals to biologics. With five products already in the market, RPGLS is making its presence felt in this fast-evolving sector amidst several big players.”

With a considerable Biosimilars market share, India is expected to become a more significant part of the pharma ecosystem in the coming years. More than 20 biopharmaceutical companies in the domestic market, such as Aurobindo Pharma, Biocon, Sun Pharma and Lupin, are actively working on biosimilar development.

Shifting from acute to acute plus chronic therapies is another avenue the company has been focusing on to bring in higher revenues.

2. Building strategic assets: Through lifecycle management of legacy products such as launching new line extensions, new dosage forms, new packaging, entering into new customer segments, new indications, etc.

Sharing the example of Naprosyn, Yugal elucidates, “As a result of strategic life cycle management, we have registered > 50% growth in this decades-old brand. It’s all set to become RPGLS’ first ₹50 crore strategic brand asset this year. Going forward, we expect Naprosyn to become our first ₹100 crore brand in the next two to three years.” The company is currently working on building strategic assets across brands and product categories, and hopes to convert many of its legacy products/ product categories to ₹50-100 crore mega brands/ product categories in the coming years.

3. Deepening customer coverage: In relevant therapy segments with a target of 90% coverage in each segment.

The more success RPGLS tastes, the more it expands its aspirations and strategies.

Rajat Bhargava,
CEO - Speciality Sector & Head - Group Transformation, RPG Group

4. Productivity and sales force effectiveness enhancement: The pharma business operates on a personal selling model. With an emphasis on sales force effectiveness, RPGLS continues to record a significant increase in productivity each year. Productivity has jumped over 65% in the last three years.

5. Leveraging innovation and digital for growth: Last year, the company launched a unique platform/ app, RPG Serv, connecting RPGLS with doctors and the field force, thus lending the brands an additional share of voice. Rajat Bhargava, CEO - Speciality Sector & Head - Group Transformation, RPG Group shares how RPGLS has adopted digital to go the extra mile, “What started as a compulsion during Covid, is rapidly evolving into a strategic digital asset for RPGLS. RPGServ, the anytime-anywhere doctor support platform connects over 80,000 doctors and offers six categories of services such as distribution of masks and safety kits and disinfecting clinics; publishing articles, providing research material; providing infrastructure and creating websites, etc. In addition, RPGLS is digitalising all key functions such as quality, HR, sales and finance.”

The International Formulations business contributes nearly 21% to RPGLS’ revenues and operates in the generics and branded generics space across geographies. “International formulations is a costly game,” says Yugal. “It requires large plants that comply with international regulations and products developed for global markets. Since we are a lean organisation, this is our second priority.”

Accordingly, the strategy for this business rests on three pillars:

1. Expand the RPGLS footprint into the ‘Rest of the World’ markets or ‘India akin’ markets: In addition to Myanmar, the company is looking to expand into emerging markets such as the Philippines, Vietnam, Thailand, Egypt and South Africa.

2. Focus on profitable, low-volume and sustainable niche product segments: The company is working towards building up its immunosuppressant portfolio, complex generics and products needing special manufacturing conditions.

3. Develop a state-of-the-art plant compliant with global regulators: With a focus on exports, RPGLS is focusing on expanding its capacities and creating modern manufacturing plants, approvable by leading global regulators.

The Active Pharmaceutical Ingredients business is the company’s smallest division and contributes around 17% to revenues. This business offers a range of high-value synthetic APIs in the general therapeutics category, with a presence in Europe, Latin America and Asia. RPGLS is now making forays into the US markets, as well.

The three strategic pillars for growth in this sector are:

1. Provide backward integration to formulation businesses: The company aims to ensure that the active drugs used in domestic or international formulations are supplied by its API business.

2. Focused growth through new products, customers and markets: The team has identified a need gap in the market and is currently undertaking R&D for new products, in addition to eyeing avenues to diversify products into more unique markets and segments.

3. Develop a state-of-the-art plant compliant with global regulators to service local and export markets:

RPGLS is reinventing itself by launching a modern portfolio in line with the global move from chemicals to biologics. ”

Yugal Sikri, Managing Director, RPG Life Sciences

Yugal is extremely proud of the company’s progress so far. “Thanks to our strategy and passionate execution of our Transformation agenda, today all our three business segments — DF, IF and API — are growing healthy double-digit in revenues, profits and profitability, consistently and sustainably. Not only is there a turnaround from a low or negative level to a positive trend but remarkably, we have caught up to become a benchmark company in a number of key financial indicators/ ratios such as margin ratios, leverage ratios, liquidity ratios, etc.”

RPG Life Sciences’ growth trajectory over the last few years is a huge success story driven by determined leadership and passionate and committed employees. The company is focusing on creating a happy performance-focused culture through a range of initiatives that focus on celebrating employee milestones, sharing key company updates, celebrating festivals together and building a large cohesive happy team.

However, this is just the beginning for the pharma major, according to Yugal. “In the future, our priority is to maintain and accelerate growth momentum in the company across segments. We will continue to grow our revenue at a rate higher than the market average and remain committed to our strategic priorities.” Rajat adds, “RPGLS’ success is driven by a rigorously executed strategy, tailored to its product-market strengths. The more success it tastes, the more it expands its aspirations and strategies. This bodes a very bright future.”

RPG Life Sciences -
The Dark Horse of
RPG Group