RPG Life Sciences' bold $215M API acquisition spree

RPG Life Sciences, part of the Harsh Goenka group, is making significant investments to bolster its drug ingredients business. In a swift move, the company acquired two active pharmaceutical ingredient (API) makers for ₹215 crore within five weeks. This aggressive strategy is driven by a belief that global demand for diversified sourcing, a 'China plus one' approach, will increasingly favor Indian manufacturers.

Managing director Ashok Nair highlighted that customers now seek reduced concentration in their supply chains, positioning India favorably to benefit from government incentives. The company, historically known for its capital prudence, has committed an additional ₹700 crore for further acquisitions. This capital is being channeled through its subsidiary, RPG Active Pharma (RPGAP), which also secured a ₹243 crore investment from healthcare private-equity firm InvAscent for a 40% stake.

The recent acquisitions include Actis Generics for ₹80 crore and Raghava Life Sciences' API and intermediates business for up to ₹135 crore. These deals have significantly boosted RPGAP's capacity. The company views the API market as a niche and super-specialized sector with fewer competitors compared to finished formulations, offering greater value and long-term contract potential.

Brokerage firm ICICI Securities maintains a 'Buy' rating on RPG Life Sciences, seeing APIs as a key medium-term growth driver. While acknowledging potential integration risks, analysts expect further deals in the API space. RPG Life Sciences aims to build a multi-site API company with comprehensive strengths across chemistry, manufacturing, approvals, R&D, and customer relationships, demonstrating an expansive ambition from a historically capital-conscious group.